Australian Competition and Consumer Commission v Geowash Pty Ltd - [2019] FCA 72 - FCA 2019 case summary — Zoe

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Australian Competition and Consumer Commission v Geowash Pty Ltd

[2019] FCA 72

Federal Court of Australia|2019-02-08|Before: Colvin J

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Source facts

Court

Federal Court of Australia

Decision date

2019-02-08

Before

Colvin J

Source

Original judgment source is linked above.

Judgment (70 paragraphs)

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HCA 25; (2009) 238 CLR 304 Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903 Kobelt v Australian Securities and Investments Commission [2018] FCAFC 18 Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 McGrath; in the matter of Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230 Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571 North East Equity Pty Ltd v Proud Nominees Pty Ltd [2012] FCAFC 1 Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 17 Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50; (2015) 236 FCR 199 Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126 Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175; (2004) 160 FCR 1 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010) 41 WAR 318 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd [2008] WASC 57 Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155 United Group Rail Services Ltd v Rail Corporation (NSW) [2009] NSWCA 177; (2009) 74 NSWLR 618 Virk Pty Ltd (in liq) v YUM! Restaurants Australia Pty Ltd [2017] FCAFC 190 WMC Resources Ltd v Leighton Contractors Pty Ltd [1999] WASCA 10; (1999) 20 WAR 489 Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661

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COLVIN J: 1 From 2013 until 2016, Geowash Pty Ltd (Geowash) offered carwash franchises to interested parties in Australia. The franchises were for hand car wash and detailing businesses to be conducted at particular sites identified in accordance with the policy of Geowash. 2 The standard Geowash franchise agreement provided that the franchisee was responsible for the payment of the costs of fit-out. In some cases, the fit-out was to include a café area where a customer could obtain refreshments while waiting for a car wash to be completed. In other cases, the franchise was to be located in a car park near a shopping area where cars could be washed or detailed while the customer was shopping. Some potential sites had existing buildings and hardstand areas that could be converted to the needs of a carwash. Others were vacant sites that required all the necessary facilities to be constructed. It was also possible for the franchise to be for the operation of carwash carts in a carpark. So, there was considerable variation in what may be required for the fit-out of a particular Geowash site. 3 Franchisees also had to pay Geowash for the equipment required to conduct the carwash business and there were other fees payable by franchisees such as an establishment fee, documentation fee, site selection costs and expenses and an initial training fee. 4 Although Geowash did itself take a lease of some sites and then sublease the sites to franchisees, in most instances once a site was identified a lease was negotiated and entered into by the franchisee with the owner of the site. Nevertheless, Geowash negotiated the leases. 5 There were 18 Geowash franchisees who commenced trading. Geowash also entered into a number of other franchise agreements but for various reasons outlets were never opened by those other franchisees. 6 At all material times, Ms Sanam Ali was the sole director of Geowash and Mr Charles Cameron was the 'national franchising manager' for Geowash. 7 In 2011, the Australian and New Zealand rights to the Geowash business concept were licensed to Hibah Til Noor Pty Ltd (HTN) by Zonda Trade LLC. HTN is a company controlled by Ms Ali. HTN in turn licensed Geowash which was the entity that entered into agreements with franchisees. HTN was not involved in the franchising activities of Geowash. 8 The Australian Competition and Consumer Commission (ACCC) claims that Geowash made representations to prospective franchisees that were not true and to the extent that they concerned future matters were made without reasonable grounds. Some of the representations are alleged to have been made by Geowash publishing material about average monthly earnings and the clients of Geowash on its website. Others concern the manner in which Geowash would charge its franchisees for the costs of establishing a franchise at a particular site. 9 The conduct of Geowash in making each of the representations is said to have been misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law (ACL). Certain of the representations are also said to have contravened s 29(1)(h) and (i) and s 37(2) of the ACL, each of which is a civil penalty provision. 10 There is a separate claim that Geowash, by Ms Ali and Mr Cameron, engaged in conduct in dealings with Geowash franchises that was unconscionable in contravention of s 21 of the ACL. The unconscionability claim focusses upon the manner in which Geowash dealt with its franchisees in respect of the costs of establishing a franchise, particularly the costs associated with the fit-out for the site from which the franchise business was to be conducted. 11 As to dealings with franchisees that occurred after 1 January 2015, the same conduct is said to have contravened the obligation under cl 6 of the Franchising Code of Conduct upon each party to a franchise agreement to act towards another party in good faith. It is a contravention of s 51ACB of the Competition and Consumer Act 2010 (Cth) (CCA) to contravene the Code. 12 Ms Ali and Mr Cameron are both alleged to have been knowingly concerned in or a party to the various contraventions alleged against Geowash. 13 The ACCC seeks extensive relief against Geowash, Ms Ali and Mr Cameron, namely declaratory relief, orders for pecuniary penalties, injunctions, orders requiring attendance at a compliance seminar, the publication of a corrective notice, orders for payment of consumer redress, orders disqualifying Ms Ali and Mr Cameron from managing a corporation for five years, orders against the respondents for the purposes of s 83 and s 137H(3) of the CCA, costs and such further relief as the Court deems fit. 14 At the final hearing, there was no appearance for Geowash. The Court was informed that the ACCC has given an undertaking to the administrators of Geowash not to enforce any relief that may be obtained without first obtaining the leave of the Court to do so. Subject to that undertaking, the matter proceeded to a final hearing of the claims to relief against each of Geowash, Ms Ali and Mr Cameron. 15 For the following reasons, Geowash (a) engaged in false, misleading or deceptive conduct of the kind alleged (save for the claim that s 29(1)(i) of the ACL was contravened); (b) engaged in unconscionable conduct as to its charging practices; and (c) breached cl 6(1) of the Code by failing to act towards four of its franchisees in good faith concerning its charging practices. Ms Ali was knowingly concerned in and a party to all the contravening conduct of Geowash. Mr Cameron was knowingly concerned in all the contravening conduct except the making of the revenue, profit and affiliation representations. 16 I am also satisfied that there should be declarations of contravention and orders for pecuniary penalties in amounts to be determined. As the parties did not otherwise address in their submissions the nature and extent of relief that might be granted if the claims by the ACCC were upheld there should be a further hearing at which the parties should make submissions as to the form of relief including whether any of the other relief sought by the ACCC in its application should be granted and, if so, in what terms.

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Alleged falsity of the representations 22 As to the Revenue and Profit Representations, the ACCC claims that the statements were untrue. Further, the figures were based on a single 28 day period of trading by one franchisee specifically selected for that purpose. It is said that the figures were not for a calendar month, were not an average and were not representative of the overall performance over a year. Therefore, the figures used could not be reasonable grounds for the statements made. 23 The statements are also said to be false statements as to a material particular concerning the profitability of the business activity of conducting a Geowash franchise contrary to s 37(2) of the ACL. 24 To the extent that the Revenue Representation and Profit Representation were with respect to future matters, reliance is placed upon s 4 of the ACL. 25 As to the Affiliation Representation, the ACCC claims that the statement was untrue because Geowash had no commercial relationship with the various brands featured on its website. It is also said to be a false statement that Geowash had sponsorship, approval or affiliation with those brands contrary to s 29(1)(h) of the ACL. 26 As to the Charging Representation, the ACCC claims that a disclosure document and a draft standard form franchise agreement were provided by Ms Ali and Mr Cameron to potential franchisees. The documents had specific provisions about charging. None of them allowed for an up front capital sum to be charged. Rather, they allowed for recoupment of actual costs of fitting out premises and costs of set-up that were incurred by Geowash. It is alleged that the presentation to prospective franchisees of the franchise agreements and disclosure documents in that form represented that charging for fit-out and set-up would occur in the manner expressed in those documents. 27 The case advanced for the ACCC as to the falsity of the Charging Representation is that the dealings by Ms Ali and Mr Cameron with franchisees concerning payments to be made did not reflect the terms of the franchise agreements and disclosure documents provided to prospective franchisees. Instead, Ms Ali and Mr Cameron dealt with franchisees in the following way: (1) Ms Ali or Mr Cameron or both of them would ascertain the maximum budget of the prospective franchisee; (2) negotiations with the franchisee would be undertaken on the basis that a franchise could be acquired for a lump sum which was discussed and agreed being typically the maximum budget of the prospective franchisee; (3) shortly after a franchise agreement was entered into, Ms Ali or Mr Cameron or both of them would demand on behalf of Geowash the payment of a lump sum; (4) the demand for the lump sum amount was made without reference to the actual costs of fit-out or set-up of the franchise site; and (5) it was the business model or practice of Geowash to make a demand for a lump sum payment shortly after a franchise agreement was entered into by the franchisee. 28 In opening the case for the ACCC senior counsel explained that the reference to 'budget' was to be understood in terms of the 'franchisee's capacity to pay'. The case alleged is that because of the evidence of the actual dealings with franchisees as to payments to Geowash, the matters stated in the disclosure documents and the franchise agreements as to the manner in which franchisees would be charged were not true. It is said that the matters stated in those documents conveyed a representation as to what Geowash intended to charge when the intention of Geowash, through Ms Ali and Mr Cameron was to act in the way that they did. They were not intending to recover actual costs. Rather, it was always their intention to charge lump sums by reference to amounts established by reference to an assessment of the capacity of the individual franchisee to pay and then apply significant parts of those monies for their own benefit. 29 To the extent that the statements in the disclosure documents and franchise agreements were statements about how Geowash would charge in the future, reliance is again placed on s 4 of the ACL. 30 The conduct in relation to charging franchisees is alleged to contravene s 18 and s 29(1)(i) of the ACL. Section 29(1)(i) proscribes the making of a false or misleading representation with respect to the price for the acquisition of services. The dealings by Geowash concerning the charges to be made under the franchise agreements are alleged to concern the amount paid or payable for the acquisition of services from Geowash. The ACCC made no real submissions as to how the case it advanced fell within the terms of s 29(1)(i) beyond asserting its application to the facts as alleged.

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Defence of misrepresentation claims 31 Ms Ali accepts that she arranged for the statements about gross revenues and profits in an average 28 day period to be published on the Geowash website, but says that they were based upon actual figures for the then most recent 28 day period of trading by the Geowash franchise in Osborne Park. She says that they were presented as monthly figures. Ms Ali claims that the use of the term average was in the nature of commendatory puffery. Further, she claims that they were not statements in respect of a 'material particular' for the purposes of s 37(2). So, even if the statements on the website contravened s 18 of the ACL, they could not give rise to any liability to pay a pecuniary penalty because they did not involve a contravention of s 37(2). It is said that there were reasonable grounds for the statements because they were based on actual trading figures for a Geowash franchisee. 32 Mr Cameron relies upon the same matters as Ms Ali and says, in addition, that he did not take any steps to publish the information on the website because that was handled by Ms Ali. He accepts that he knew that the information had been published and that he spoke to Ms Ali about the statements at about the time they were published. 33 As to the Affiliation Representation claim, Ms Ali and Mr Cameron admit that Geowash did not have established client relationships with the parties concerned. They say that Geowash International (the owner of the brand) did have those affiliations. They say that they believed that they could rely on the relationship with Geowash International to support the statements made about client affiliations. Mr Cameron also claims that he could rely upon relationships between individual franchisees and their dealings with businesses associated with some of the brands. For those reasons they say that they were not parties who were knowingly concerned in any conduct by Geowash that may contravene the ACL. 34 Again as to affiliation with the various brands, Mr Cameron says that he did not take any steps to publish the information on the website because that was handled by Ms Ali. He accepts that he knew that the information had been published and that he spoke to Ms Ali about it at the time. 35 As to the Charging Representation claim, Ms Ali and Mr Cameron say that there was nothing in the disclosure documents or the franchise agreements about how the franchisees would be invoiced. They say that in their dealings with the franchisees they asked for a budget in order to ascertain how much the franchisee wanted to spend, to avoid exploring inappropriately cheaper options and to act in the franchisee's interest to pursue the best opportunity available. Further, they say that the way in which Geowash charged its franchisees was explained in plain English documents given to all prospective franchisees. It was those documents that franchisees relied upon when entering into the franchise agreements and it was not misleading in any way to deal with franchisees in relation to charges for fit-out and set-up costs in a way that reflected those documents. 36 Ms Ali and Mr Cameron also say that franchisees were charged in accordance with the terms of the franchise agreements or at least their understanding of how those documents operated which understanding was based on legal advice received by Geowash. 37 Mr Cameron says that Ms Ali was responsible for preparing the estimates upon which invoices to franchisees were based. 38 They accept that monies received from franchisees were used to pay amounts to each of them that were calculated based upon a percentage of those amounts, but they say that Geowash was entitled to pay those amounts from the monies received from the franchisees. They say that the percentage based amounts were to remunerate Ms Ali and Mr Cameron for the work that they did to negotiate lease terms, establish the franchise premises and arrange the fit-out, permits and other matters required for each site. On that basis, they were part of the costs that Geowash was entitled to charge franchisees. 39 To the extent that the Charging Representation is alleged to contravene s 29 of the ACL, they say the case advanced by the ACCC concerns a representation about how the franchisees were to be invoiced, not a representation about the total price to be charged to franchisees. Therefore, it could not be a basis upon which to establish a contravention of s 29(1)(i) because it did not allege the making of a representation 'with respect to price'. 40 They also say that by reason of the legal advice given to Geowash, they believed that the charging conformed to the requirements of the franchise agreement and, on that basis, they could not be knowingly concerned in or party to any misrepresentation about price by Geowash.

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Unconscionable conduct and lack of good faith 41 The ACCC claims that Geowash, by Ms Ali and Mr Cameron, engaged in unconscionable conduct and did not act towards its franchisees in good faith by: (1) negotiating the sale of franchises to prospective franchisees who were typically unsophisticated when it came to owning and operating a business; (2) ascertaining from the prospective franchisees their maximum budget; (3) negotiating with prospective franchisees as if a franchise could be acquired for a lump sum, being typically the maximum budget; (4) engaging in the above conduct despite it being inconsistent with the terms of the franchise agreement and disclosure document; (5) representing that the prospective franchisee would be able to acquire an operating Geowash franchise within the discussed budget; (6) invoicing for lump sums under franchise agreements when there was no right to do so; (7) demanding and pressing for urgent payment of lump sums that were usually more than the budget that had been discussed; (8) failing to deliver an operating car wash to the majority of its franchisees; and (9) spending a significant portion of the funds received from franchisees for purposes that were not permitted under the franchise agreements, including payment of general operating expenses of Geowash, the payment of commissions to Ms Ali and Mr Cameron and transferring funds into assets directly or indirectly controlled by Ms Ali or Mr Cameron. 42 As to the unconscionable conduct, in broad terms the ACCC says that Geowash dealt with prospective franchisees by agreeing a lump sum amount to be paid for a franchise that reflected the budget of the franchisee. Those agreements were reached with franchisees at a time when there had been no fit-out. The ACCC claims that although Geowash was entitled to undertake the fit-out as agent for the franchisee and charge for the fit-out costs and certain other specific charges, what occurred was that Geowash, without regard to actual fit-out costs or charges that could be made by Geowash under the franchise agreement, invoiced franchisees for two instalments of the lump sum amount. It says that when the instalments were paid, a considerable proportion was used to pay amounts to Ms Ali and Mr Cameron based upon a percentage when the franchise agreement did not allow Geowash to charge franchisees for such commissions. It also says that the instalment amounts were applied to meet general operating costs of Geowash rather than to meet the cost to fit-out the premises for the particular franchise. Ultimately, it is claimed that Geowash failed to deliver an operating car wash franchise to the majority of its franchisees. 43 As to the alleged failure to act towards the franchisees in good faith, the ACCC relies upon the same conduct to the extent that it occurred after 1 January 2015.

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Defence of claims of unconscionable conduct and breach of good faith 44 A number of answers are advanced by Ms Ali and Mr Cameron to the claims of unconscionability and failure to act in good faith. They say that the franchisees did not lack sophistication in business matters. They say that the representations that they made to the franchisees about the way in which they were to be charged and the dealings they had with franchisees were consistent. So, even if Geowash did not charge in accordance with the terms of the franchise agreements (which is disputed), they could not be found to have engaged in unconscionable conduct or to have dealt with franchisees in a manner that was not in good faith because in their dealings with franchisees they acted in a manner that was consistent with what they told each franchisee. They also claim that the franchisees committed to their franchises based upon the information that Ms Ali and Mr Cameron provided, not upon a close reading of the disclosure documents and the franchise agreements. On that basis, they contend that there could be no exploitation or taking advantage of franchisees by Geowash acting consistently with the information that had been provided. 45 As to the charges that were made, Ms Ali and Mr Cameron say that Ms Ali developed an estimate as to what the development cost would be for a particular site based on a business model that involved Ms Ali and Mr Cameron doing work 'in-house'. This enabled them, it was said, to keep costs to franchisees at a competitive level. By invoicing franchisees in lump sum 'staged payments' they say that they were acting in accordance with legal advice to Geowash. They also say that the advice was to the effect that Geowash could include the percentage based payments made to Ms Ali and Mr Cameron as part of the staged payments. 46 They say that operating carwash businesses were delivered to the franchisees. 47 As to the claim that Geowash acted towards its franchisees in a manner that was not in good faith, Ms Ali and Mr Cameron advance the same responses that they raise in respect of the claim of unconscionability. In addition, they say that the ACCC has not identified with precision the aspects of the conduct relied upon. They contend that it is only conduct that occurred after 1 January 2015 that is relevant and that for the franchisees who gave evidence, they all committed to their franchise agreements before 1 January 2015. 48 A submission was also advanced for Ms Ali and Mr Cameron that the case as advanced by the ACCC concerning unconscionability and the failure to act towards franchisees in good faith is confined to dealings with those franchisees who gave evidence at the final hearing. 49 No submission is advanced to the effect that the activities the subject of the proceedings were not undertaken in trade or commerce.

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Issues for determination 50 The Court was presented with a great deal of written evidence to which no reference was made, both in the form of documents and written testimony. The evidence of franchisees raised complaints about aspects of their dealings with Geowash that were not the subject of the claims made by the ACCC. The case proceeded to final hearing on the basis of a concise statement. There was no application by the ACCC to amend. In those circumstances, it is important to ensure as a matter of fairness that the case as advanced by the ACCC is confined to the concise statement. 51 I directed that the parties file closing submissions in which the findings that the Court was invited to make were stated. Much of the evidence was not addressed in those submissions. In particular, submissions advanced for Ms Ali and Mr Cameron were not constrained by the discipline of a close consideration of the documents, affidavits and oral evidence. Instead, the submissions were constructed at a level of generality that failed to engage with the detail. The Court was not taken to many of the documents that were received into evidence whether by way of references to support submissions or findings the Court was asked to make or otherwise. These reasons reflect the way matters were addressed by way of closing submissions and the findings that the Court was invited to make. 52 Aside from the claims concerning the Revenue, Profit and Affiliation Representations, the main case advanced by the ACCC focussed upon the way Geowash charged franchisees who entered into a franchise agreement and what it did with the money. Although a lot of evidence was led to place those dealings in context, ultimately, the case concerned only the dealings by Geowash (through Ms Ali and Mr Cameron) in relation to those charges. Speaking broadly, the case alleged by the ACCC as to what franchisees were charged reduced to two main parts. 53 The first part of the charging case advanced by the ACCC was that Geowash represented that the charges it would make for the fit-out and set-up of each franchise site would be for the actual costs incurred by Geowash when the intention was to charge by reference to what each franchisee was willing to pay and use the money to pay commissions and meet general operating costs and expenses of Geowash (being costs that included, but were not confined to, the fit-out and set-up of each outlet). Geowash kept no records showing how the money it charged to each franchisee was spent on fit-out and set-up. Key to this aspect of the case was the making of payments by Geowash to Ms Ali and Mr Cameron that were described in its bank statements as 'commissions'. Ms Ali and Mr Cameron maintained that the commissions were actually payments for work done to establish and set-up each franchise. The ACCC maintained that they were payments made for securing the 'sale' of a franchise. Linked to this part of the case was the claim that charges were rendered by Geowash to franchisees on the basis of what they were willing to pay. It was this manner of charging that provided the means by which Geowash could plan to pay the commission payments and then use the balance of the amounts received from franchisees to meet actual fit-out and set-up costs. 54 The second part of the charging case advanced by the ACCC was that the way franchisees were charged was unconscionable or in breach of the duty to act in good faith in dealing with franchisees. Essentially, franchisees were told they could acquire a franchise within a budget, they were then invoiced lump sum amounts that Geowash was not entitled to charge that were often more than the budget and a considerable part of those amounts was applied to pay commissions to Ms Ali and Mr Cameron and to meet general operating costs of Geowash rather than to meet the costs of establishing the franchise. Ultimately, Geowash failed to deliver an operating car wash to a number of franchisees. The franchisees were relatively unsophisticated when it came to setting up a franchise business. 55 Although there were attempts by both the ACCC on the one hand and Ms Ali on the other hand to construct from the available information figures as to where the money was spent, in the result neither party was able to demonstrate in a meaningful way to the requisite standard how much of the amounts paid by franchisees was spent on each franchise. So, in order to determine the issue as to where the money was spent it is necessary to consider the course of dealings with franchisees and general evidence as to what Geowash did with the money, including whether franchise sites were actually established with the money. 56 Given the context in which the allegation about the failure to establish an operating car wash is made, the case alleged by the ACCC is that the failure to establish the car wash was a consequence of the way Geowash applied the funds it received. In effect, the scheme or system alleged involves failing to deliver a car wash. No such case was established by the ACCC. 57 The issues for determination are: (1) were untrue statements made on the Geowash website about the average revenue and gross profit that a leading Geowash franchisee had earned; (2) were the statements about revenue and profit no more than commendatory puffery; (3) to the extent that they concerned future matters (namely an indication of the levels of revenue and profit that a leading Geowash franchisee could earn in the future) was there a reasonable basis for the statements about revenue and profit; (4) were the statements about revenue and profit misleading having regard to the context in which they were made; (5) were the statements about revenue and profit false or misleading in a material particular concerning the profitability, risk or other material aspect of the business activities of Geowash; (6) was it misleading to display the international logos on the Geowash website under the heading 'Our Clients'; (7) did the display of the logos involve a false or misleading representation that Geowash had a sponsorship, approval or affiliation in respect of the companies who used those logos; (8) did Geowash engage in misleading or deceptive conduct in respect of its communications with franchisees about how they would be charged; (9) did Geowash make a false or misleading representation with respect to the price of goods or services in respect of its communications with franchisees as to how they would be charged; (10) are the claims against Ms Ali and Mr Cameron alleging unconscionability and a failure to act towards franchisees in good faith confined to those franchisees who gave evidence at the final hearing; (11) did Geowash engage in unconscionable conduct of the kind alleged; (12) what is the nature and extent of the relevant obligation under the Code to act towards the franchisees with good faith; (13) did Geowash breach its obligation under the Code to act towards the franchisees in good faith in the manner alleged; (14) was Ms Ali involved in any contravention by Geowash; (15) was Mr Cameron involved in any contravention by Geowash; and (16) should the relief sought by the ACCC be granted?

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Part II: Overview of course of dealings between Geowash and franchisees 58 The evidence at the final hearing demonstrated that, for the most part, dealings by prospective franchisees with Geowash followed a similar course. Certain of the documents exchanged between Geowash and individual franchisees were similar in content. The evidence of Ms Ali and Mr Cameron was also to the effect that certain steps were taken with respect to most franchisees and that Geowash adopted what was described as an invoicing practice that involved staged payments. 59 It is convenient to deal with my findings as to these matters at the outset before considering the evidence of dealings with particular franchisees. 60 If a franchisee made an inquiry then an initial email would be sent to the prospective franchisee. The form of the response changed over time. It was an email of a few paragraphs. Attached to the email was a document described as 'Franchise Overview'. 61 The Franchise Overview was a colour brochure describing the Geowash hand car wash business. Under the heading 'Low Establishment Investment' it contained information depicting the range of costs for a Geowash site. It referred, for example, to ranges from $89,000 for a car park franchise to $250,000 for a car wash and café. 62 It also had a section describing a five stage application process. Stage 5 was expressed as follows: • After 14 days, you can now legally sign your Franchise Agreement and pay the balance of your initial Franchise Fee … • After 7 days cooling off period, you may now proceed and pay the balance of your Franchise Purchase Price. 63 After the reference to Stage 5, the Franchise Overview then stated: Geowash Hand Car Wash franchise development department will now take-over and begin specific negotiation on your preferred location. Once a site is secured with acceptable rental terms, a timeline for your training and pre-opening planning will be put in place so you will know what is happening over the coming weeks and months leading up to your new Geowash Hand Car Wash opening. 64 Under the description of the five stage application process was a note expressed as follows: NOTE: Applicants that complete Stage 5 will be securing the rights to opening a Geowash Hand Car Wash in their preferred location. A specific site is not identified and negotiated until the applicant has signed their franchise agreement and paid their deposit. In the unlikely event a suitable site is not secured within 12 months, the franchisee can take up another site that might be available, or receive a refund of their deposit less reasonable costs incurred as per the franchising code of conduct. 65 Geowash also used a document entitled 'Franchisee FAQs'. It was provided to prospective franchisees. It stated that the total initial investment for a franchise ranges between $140,500 and $350,000. It also stated: At what stages, am I required to pay? You pay franchise establishment fees … to become part of the Geowash brand. You pay 50% of the balance of your purchase price upon selection of your site. You pay 50% remainder upon commencement of site construction/set up. 66 A separate document entitled 'Your Next Step' was also provided to prospective franchisees. It contained an application form with details to be completed by the potential franchisee. Under the heading 'Application Form For Purchase of Geowash Franchise', the document set out five stages: Stage 1 Complete the details at the back of this profile and E-mail them back to info@geowash.com.au. Please also include the signed copy of the Confidential Non-Disclosure Agreement. Your application will be reviewed where we will hope to ensure you have the ideal characteristics for the business structure. If your application is successful, you will be invited to proceed to the Second Stage. Stage 2 At the Second Stage, Geowash will make an offer to purchase the rights for your selected region, territory, state or country. Stage 3 Once the offer is accepted, you will be asked at this point to sign the Franchise agreement and pay the Franchise Fees for the purchase of your Geowash Franchise. Stage 4 Once you have purchased the Geowash Franchise, we will provide you with further information required for the establishment of your outlet. You will be trained under our comprehensive training program. Stage 5 (Final Stage) With our personal assistance you will commence your business. 67 At about the time the above documents were provided, meetings were arranged between the prospective franchisee and Ms Ali, Mr Cameron or both of them. Sometimes other parties involved with Geowash attended the meetings. In particular, Mr Barjesh (Barjji) Kalyan and Mr Amandeep (Garry) Gujral, the Geowash master franchisees in Western Australia, were involved in some meetings with some franchisees. 68 Each prospective franchisee was invited to pay a refundable deposit of the order of $4,000 or $5,000. If they did then they would be provided with a Disclosure Document and draft franchise agreement (prepared by the solicitors for Geowash, Madgwicks). In some cases there was some discussion and revision of the terms of the draft franchise agreement. After that, if the franchisee decided to proceed, Madgwicks provided a final version for signature. 69 Once the formal documents were signed, Geowash immediately issued an invoice for the establishment fee (about $35,000), less the deposit already paid. A commission of 40% of the establishment fee was then paid by Geowash to Ms Ali or Mr Cameron (depending on who was responsible for securing the sale of the franchise) or the commission may be split between them. 70 There were then discussions between the parties about the site for the Geowash franchise. In some instances, those discussions were a continuation of earlier discussions about possible sites that had commenced prior to the signing of the formal documents. 71 Once a site was selected, Geowash immediately invoiced the franchisee for the first instalment of a 'Purchase Price', usually being 50% of the balance of a specified amount that had been raised in discussions between the parties before the franchisee committed to signing the documents. 72 A further invoice for the remaining 50% was issued by Geowash to the franchisee at the time that work was to commence on the site. 73 The two instalments of 50% were the amounts that were described as 'staged payments' by Ms Ali and Mr Cameron. 74 Issues arise as to the practice that was followed by Geowash in its dealings with franchisees concerning the 'Purchase Price', how the amount was established and its precise character having regard to the terms of the Disclosure Document and the franchise agreement. I deal with the evidence and my findings concerning those issues separately below. 75 At this stage I note that neither the Disclosure Document nor the franchise agreement provided expressly for the payment of a purchase price or for payment of fit-out and other set-up costs in two instalments. Rather, the documents referred to the payment of a franchise establishment fee and the actual costs associated with the fit-out of the site. 76 The Disclosure Document typically stated that costs of 'Fit-out of kiosk and storage including plans, signage connection of water and power' being 'Approximate cost $35,000-$400,000 (exclusive of GST) depending on the type of site' were to be paid, in the case of new businesses, 'to the franchisor or direct to contractor or supplier' and to be due 'as required by the franchisor or supplier/contractor preforming [sic] work'. 77 The franchise agreement stated that where Geowash elects to conduct the fit-out as agent for the franchisee then 'the Franchisee must pay the Fit Out Costs to Geowash or its appointed representative prior to commencement of the Fit Out': cl 4.7(c). The definition of the term 'Fit Out Costs' was amended in August 2014, but at all times it was defined in terms that referred to actual costs such as architect costs, fit-out management costs, lessor approval costs, permit costs, building contractor's costs, pre-fabricated kiosk, materials, equipment and installation costs. 78 There was evidence from Ms Ali and Mr Cameron (considered below) to the effect that Ms Ali estimated the costs of fit-out and that an amount of up to 20% of the purchase price or staged payments was due as 'commission' when those payments were received by Geowash. 79 In that context, issues arise as to whether the instalments were based upon a price that was an agreed purchase price for a Geowash franchise or whether they reflected an estimate of likely fit-out costs undertaken by Ms Ali or whether the instalments were, in substance, a demand for payment of the maximum amount that the franchisee was willing to pay irrespective of the actual costs that might be incurred in establishing the particular franchise. Further, there are issues as to what Geowash was entitled to charge for the fit-out of each site, what Ms Ali and Mr Cameron said about charging for fit-out, how the payment of the amount of 20% of the instalments was to be treated in charging franchisees and whether Geowash was obliged to account to individual franchisees in the event that the actual fit-out costs incurred were less than the amount of the instalments. 80 It is alleged by the ACCC that individual franchisees were invoiced for amounts that were not based upon estimates of fit-out costs but rather were determined based on the assessment by Geowash of the maximum amount that the franchisee was willing to pay to secure a Geowash franchise. Further, the ACCC alleges that the 20% of instalments from franchisees was paid by Geowash as a commission to Mr Cameron or Ms Ali as the case may be and was not properly chargeable as fit-out costs under the terms of each franchise agreement. 81 There was evidence from seven people who made enquiries in relation to a Geowash franchise and, through various company or trust structures, entered into a franchise agreement with Geowash. I deal with the evidence of each of these witnesses separately below, but first I consider the terms of the franchise agreement used by Geowash.

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Part III: The franchise agreement 82 In evidence were the franchise agreements that had been entered into by Geowash with each of the 18 franchisees with whom Geowash concluded agreements for the operation of a franchised hand car wash business. As to the arrangements and payments to be made by franchisees in respect of the establishment and fit-out of a franchise, each of the agreements was in substantially similar terms. 83 First, the franchise agreements provided for initial payments to Geowash of a number of fees including an Establishment Fee: cl 2.1. In each case the Establishment Fee was $35,000 or thereabouts. The deposit which was to be paid upon submission of application for a franchise was credited towards the amount of the deposit when a franchisee entered into an agreement. Other fees were payable as initial payments, including payment for such equipment as was required by Geowash to be utilised in the operation of the franchise: cl 2.1(d). 84 Second, if no site was identified in the agreement, the franchisee must use its best endeavours to select and secure a site in accordance with Geowash's site selection policy: cl 4. It was usual for Geowash to enter into franchise agreements without a site having been identified. 85 Third, there was an obligation upon the franchisee to enter into a lease and other agreements relating to occupation of the selected site: cl 4.2. 86 Fourth, the franchisee was responsible for payment of Geowash's costs and expenses incurred in relation to site selection, obtaining a lease and other agreements to establish the right to occupy the site and be provided with services at the site (including a step-in agreement for Geowash): cl 4.4. However, it is to be noted that the Disclosure Document indicated that such costs would be up to $8,000. It did not contemplate a large charge for such costs. 87 Fifth, where fit-out was required by Geowash, the franchisee was responsible for payment of the 'Fit Out Cost': cl 4.7(a). The term Fit Out Costs was defined to mean: Such amount as may be necessary to cover the costs of the Fit-Out including architect costs, fit-out management costs, lessor approval costs, permit costs, building contractor's costs, pre-fabricated kiosk, materials, equipment and installation costs. 88 In later versions of the franchise agreement the definition was changed to add after 'management costs' the words '(including any Geowash management fees for managing the process of design and Fit Out)'. It may be accepted that these additional words allowed Geowash to render an account to franchisees for fair and reasonable costs of managing the design and fit-out of a franchise site. I note that there is no evidence that Geowash rendered any accounts for management fees or took steps to assess a fair and reasonable fee for any such fees. 89 Significantly, the obligation was to pay actual fit-out costs. The agreement did not contemplate the payment of an agreed price to Geowash for arranging the fit-out that was set by reference to some measure other than cost (such as the budget as to the amount that the franchisee was willing to pay). Nor did it refer to the payment of sales commissions to Geowash staff or a master franchisee. Further, by specifying particular costs it was evidently not a means by which Geowash could request franchisees to pay monies to be applied by Geowash in meeting its general operating costs and expenses. 90 Sixth, the agreement provided for the franchisee to appoint Geowash as its agent to conduct the fit-out of the site unless Geowash required the franchisee to conduct the fit-out: cl 4.7(a)(ii). 91 Seventh, where Geowash elected to conduct the fit-out as agent for the franchisee the franchisee was required to pay the Fit Out Costs prior to the commencement of the fit-out. There was no reference to staged payments. There was no reference to a payment being required to be made upon selection of the site which could be well before the commencement of the fit-out and before the nature and extent of the fit-out was known and estimates or quotes had been obtained by Geowash. Even so, there was provision whereby Geowash could require the payment of the Fit Out Costs in advance if it was conducting the fit-out as agent for the franchisee. 92 Eighth, there was provision whereby Geowash may require the payment of a security deposit as specified in the agreement (being an amount of $10,000) if any monies payable under the agreement were more than seven days overdue: cl 22. However, there was no other provision whereby Geowash could require a lump sum payment in advance of amounts falling due under the franchise agreement. 93 So, although the terms of the franchise agreement may have justified requests for substantial staged payments on account of expected Fit Out Costs, it defined those costs. There was no power to make a general request for payment of amounts as part of an assessment as to what the 'purchase price' might be for a franchise. Further, any such amount that was paid in advance would have to be accounted for by Geowash. It could only be retained if indeed Fit Out Costs in that amount were incurred.

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Rajvinder Singh and Keeran Pty Ltd (Geowash Domain Car Park) 96 Mr Rajvinder Singh is the sole director and shareholder of Keeran Pty Ltd. 97 Mr Singh has a Bachelor of Commerce degree which he obtained in India. His first language is Punjabi. He migrated to Australia in around 1999. 98 For about 12 months in 2004 to 2005 he was in partnership with a friend trading as Group Matrix Security. They provided security guard service on a subcontract basis. They both worked in the business. There was one other staff member. 99 From around 2005 or 2006 to May 2013, Mr Singh was a taxi driver. From May 2013 to July 2014, Mr Singh worked part-time as a nursing assistant employed by Baptist Care Sydney. 100 Keeran started trading on 11 September 2014 as a Geowash franchisee in the Domain Car Park in Sydney. The business ceased trading in July 2016. Since then, Mr Singh has worked as a field officer for Service Stream performing gas disconnections and reconnections for residential and commercial customers and as a bus operator for the State Transit Authority of New South Wales. 101 Mr Singh was cross-examined about his experience in business. He said that as a taxi driver he worked 'under an ABN'. He agreed that he had a history of forming a company and appointing himself as a director. He agreed that he had been a business owner in different industries and different formal business arrangements. He said that he partially understood numbers. He said that he had obtained his commerce degree back home in India in a different country with different business structures. 102 It was put to Mr Singh that the arrangements that he made for the businesses in which he had been involved 'aren't unsophisticated business arrangements'. He said he did not get what was meant by 'unsophisticated'. Rather unhelpfully it was then put to him that he was 'not an unsophisticated business person'. When it was suggested to him that he had 'some experience in business' he responded, 'not really'. He accepted that he had previously had experience as a business owner. It was put to him that he had by the time he approached Geowash, $200,000 to invest in a business. He explained that the money had come from selling his home. After paying out the mortgage on his house the remaining balance was around $230,000 and he put this aside to invest in a business. 103 Mr Singh had no previous experience with any franchise business. He had not worked in a car wash. 104 It can be seen that Mr Singh had no significant small business experience as at the time he approached Geowash. His lack of experience is shown by the evidence as to the early exchanges that he had with Geowash as a prospective Geowash franchisee. 105 In August or September 2013 Mr Singh found the Geowash website and sent an inquiry via the website contact. 106 On 23 October 2013 Mr Singh received a version of the initial email from Geowash in response to his inquiry. It attached the Next Steps document and the Franchise Overview. 107 Mr Singh was cross-examined at some length about what he understood from those documents. His responses were to the effect that the amount to be paid was dependent on the particular site and how much it was going to cost. He understood that once there was a fixed site he needed to pay the balance of the purchase price which 'was going to be on the basis of what your site would be'. He was asked about his understanding of a statement in the Franchise Overview to the effect that after seven days of signing a franchise agreement the franchisee may now proceed and pay the balance of the Franchise Purchase Price. He said his understanding was that the payment 'will be … based on what your site is going to cost because you wouldn't make the payment without knowing what your site is and how much it is going to cost'. 108 Mr Singh understood that there could be a range of franchise purchase prices depending on the site. The purchase price would not be payable until he knew the site and how much it was going to cost. 109 After reading the Franchise Overview, Mr Singh was interested in the potential for a car wash and café site option based upon the range of set-up costs quoted in the Franchise Overview. He responded by saying that he was interested in 'the standalone with café' and asked if there was any such site available. After that he had a number of phone calls with Ms Ali. He told her that he had sold his house to get the money to invest in the business and he had a maximum investment budget of around $200,000 and he was not willing to go above that figure. He also had some phone calls with Mr Cameron. 110 On 12 November 2013 Mr Singh met with Ms Ali, Mr Cameron and Mr Garry Gujral (to whom he had spoken previously and who identified himself as the Geowash master franchisee). In that meeting Mr Singh said that he wanted to stay within his means and was not willing to invest more than $230,000. He was told he would need to pay an initial deposit of $4,000 and Geowash would send him the franchise paperwork. He paid the deposit of $4,000. 111 Mr Singh told Ms Ali at the meeting that he was interested in securing a standalone site with a car wash and café within his maximum budget of $230,000 and Ms Ali said that was no problem and should be okay. Mr Cameron says there was no such conversation. Having regard to the terms of the emails set out below I accept the evidence of Mr Singh. I note that the emails refer to the cost of an individual Geowash outlet not exceeding $230,000 and ask questions about products to be sold in the café and the supplier of 'coffee/milk/muffins/sandwiches'. 112 Mr Singh then received a franchise agreement and disclosure document which he read. He asked Ms Ali in a telephone conversation to confirm that his total investment cost to establish a traditional car wash and café site would not exceed $230,000. He received an email from Ms Ali dated 4 December 2013 stating: Our disclosure document is intended to provide a range of costings to enable prospective franchisees to know rough figures for items pertaining to the establishment of an individual Geowash outlet. To assist you I can be more specific and confirm that your investment to establish your Geowash outlet shall not exceed $230,000. I will talk to you tomorrow morning to go through all your questions. 113 On 6 December 2013, Mr Singh sent the following email to Ms Ali: Sanam i have few queries, which i could not understand myself, seems like i have to go to some lawer. 1. Will i only be dealing with you or i have to deal with Zonda and Hibah tul noor etc too?. If there is any issues that arise between geowash australia and the mentioned companies, will i be responsible for any cost realating to that. Could anything impact me if you are having/ future issues between you and the said companies? 2. Disclosure document page 16, 9.1(c,d) an associate of franchisor....when i buy/aquire any goods from the nominated supplier, do you make any commision out of that? 3. p.16, 10.1(a) Will you set the products to be sold in the cafe, how we going to agree what to keep/sell without having any set menu....and who will the supplier be for coffee/milk/muffins/sandwiches etc,. It will be approved by you or i will be open to choose. 4. p 37 17c.1(b,c,d,e,f) Can you please explain me these clauses in writing with example appologies for not undestanding them properly. 5. Franchise agreement p6 5.l Training, Sanam can you please advise me in writing that all the staff training will be done by franchisor for the opening of new site. 6. p 20, 18 What could be the special resolution? and how will that be passed, will it only be franchisor's decision or franchisee would participate in it. 7. p20, 19 Minimum requirements....if the minimum levels not achieved, will there be minimum franchise fees payable? 8. Franchise fees is % of gross revenue? before taking out any expences ? 9. Sanam the 230000 amount you have advised, that should include eveything, including the setup, initial payments, cafe setup etc. 10. This $4000 is part of franchise establishment fees? Thats all for now, i will have more questions to ask, i am legaly illetrate so pardon my ignorance about some of the questions. 114 The nature of the email reveals two matters. First, Mr Singh payed close attention to the terms of the agreement, but did not have a sophisticated understanding of its terms. Second, he was concerned to ensure that the $230,000 amount would include all of the costs of securing the Geowash franchise. These are matters that would have been plain to Ms Ali as the recipient of the email at the time. 115 Ms Ali sent an email responding to the questions that Mr Singh raised in his email of 6 December 2013. 116 In response to question 2 concerning commissions Ms Ali responded: We don't receive undisclosed commissions or rebates On products we buy at wholesale rates for Australia. Your franchisee pricing is dependent on quantities ordered. 117 As to question 5 concerning staff training for the opening of the new site Ms Ali responded: Yes Raj. I personally will supervise the opening of your site on site. Please let's make sure the coffees good and we have lactose free milk (cater for my not so good stomach, I am Lactose intolerant). 118 As to question 9 concerning the $230,000 amount 'including the setup, initial payments, cafe set up etc', Ms Ali responded 'Everything'. 119 It was put to Mr Singh in the course of giving his oral evidence that the franchise agreement did not tell him about when he would be invoiced. He responded: It did. As I mentioned, it will be based on the site so they can't just invoice me without finalising the site so just by putting seven days you don't even know what the site is and how much it's going to cost or any details about that. 120 Later, it was put to him that he understood that once a site was selected he would be liable to pay the franchise payment price. He responded 'That's right but only after they have given me the amount'. When asked what he meant by amount, he explained 'Like, once they selected the site and given me the amount that how much it's going to cost'. 121 Later, he was asked whether he understood the specific expenses referred to in the franchise agreement were part of the franchise payment price. He responded 'That's right'. Given the context in which the answer was given, this answer was not a concession that he understood there would be other charges that were not referred to in the franchise agreement. The question was asked without any emphasis on the word 'part'. There was certainly no suggestion at the time the question was put that there might be substantial selling commissions and Geowash management fees that formed part of the franchise payment price. The answer must be read in the context of Mr Singh's later evidence that the franchise payment price was payable only after Geowash had selected the site and Mr Singh had been given the amount of how much it was going to cost. 122 The clear impression created for a person in the position of Mr Singh by these dealings is that he will be able to secure an individual car wash franchise site with a café for an amount that would not exceed $230,000 and the final amount would reflect the actual cost of establishing the site. He would have to pay an amount that depended upon those costs and that would be the purchase price for his franchise. 123 On 16 December 2013 Mr Singh advised Ms Ali that the franchise documents would be signed. On 17 December 2013 Geowash sent him an invoice for the 'Geowash Franchise Purchase Establishment Fees'. The covering email stated: As explained, at this stage, you are only required to pay the Franchise Establishment Fees and part payments will be required as we head towards the next stage. 124 Mr Singh obtained legal advice about the franchise agreement. He signed the franchise agreement and disclosure document on 18 December 2013 (and later re-executed it in February 2014). 125 On 24 December 2013 Mr Singh paid $34,500 to Geowash being the balance of the establishment fee. 126 On 6 January 2014, Ms Ali sent an email to Mr Singh identifying some sites to consider and also mentioned that Geowash was in discussions with InterPark Australia (InterPark) regarding the Sydney Domain car park site. 127 In the first few months of 2014 he had a number of discussions with Ms Ali about a site in Mona Vale in Sydney. They also exchanged emails, copied to Mr Cameron, about dealings with Inter Park concerning the Domain site. 128 On 21 March 2014, Ms Ali sent a further invoice for $107,250, which was said to be 'Part Payment for Purchase of Geowash Franchise Site in NSW'. 129 In discussions with Ms Ali concerning the Mona Vale site, Mr Singh was told by Ms Ali that the total setup costs would be within his budget of $230,000. 130 An issue arose as to whether the $230,000 included GST. 131 On 27 March 2014, Mr Singh sent an email with a number of questions. Ms Ali responded with an email inserting answers. That email is as follows (amended to depict Ms Ali's responses in italics): 1. As you are aware of my financial position, my maximum capacity is 230000 including everything, which has to be including the Gst and all the documtation cost. You can claim all the GST back. I can't do justice to this site by you effectively reducing another 10% off the price. GST is claimable. 2. If I spent everything I won't be left with any working capital, to be comfortable I have to have some working capital to cover at least first 2 months, I hope things will be good from the day we open the site but we have to be cautious, and this site will be very important for myself as well as for the Geowash as we both have great hopes. I want to be successful and wish to grow business. The initial shocks can be challenging for the business while we will be trying to built the clientele, I am happy to go ahead if you can finance me the working capital. Are you saying you don't now want the site then? 3. Sanam as we spoke, what offer are we making for the site, try to negotiate your best, if they are not coming down much, can you try to negotiate not to increment the rent for first 2-3 years. We are wanting to get in there and get the best deal for you. I've given you the best deal I can to which you agreed and I invoiced for the payment. Delaying that is risky as the agent has already told me the owner is also fielding two offers to buy the site. Whilst it may be a ploy, I don't like the uncertainty of not being able to go in and put your details up and get best deal we can. We'd hate to miss out on the site, whilst we go back and forth. I will get back to you if I have anything else to ask, I hope these will be my main concerns. 132 Mr Singh decided not to proceed with Mona Vale. Nevertheless, he paid the invoice because he thought Geowash had the legal right to demand that he pay the set-up costs for a franchise and to secure the Domain site and also smooth his relationship with Ms Ali. 133 On 5 April 2014, Mr Singh emailed Ms Ali about the Domain car park site. Ms Ali responded that Geowash was preparing a proposal for the approval of management at the Domain car park site. The email included the following: I am utilising the services of, who I believe is, the most professional car wash builder in the country. We envisage a shopping centre type operation and in our proposal are seeking access to car spaces for detailing and washing in a central location. The position we have requested for this site that you have chosen as your Geowash location is at the second level right next to the exit/entrance for pedestrians … We propose the permanent set up on the second level … but are also going to request roaming access to the other floors with carts located at strategic points tragetting [sic] parkers there. 134 On 15 April 2014 Ms Ali sent a copy of the proposal submitted to the Domain car park and stated, amongst other things: 'Once proposed set up is finalised, at that stage, we crunch some numbers'. The proposal depicted three examples. Each depicted storage lockers and extensive signage. The proposal also outlined the branding of the car wash with an extensive Geowash booth, car park exterior signage, installation of attractive branding throughout the ramps of the car park, signage at the entrance, access to a storage area of up to 20 square metres, installation of drainage and lighting and access to a cashier office. It showed carts and referred to roaming access to the car park for Geowash carts. 135 Accordingly, the proposal depicted a traditional car wash and roaming carts with substantial signage throughout the car park and rebranding of the cashier office as a Geowash booth. 136 On 21 May 2014, Ms Ali sent an email to Mr Singh (copied to Mr Cameron) stating that 'commencement date at the moment is on 1.7.14'. On the same date, Ms Ali (copied to Mr Cameron), requested Mr Singh to sign an acknowledgement that he had selected the site from a number of potential sites and that Geowash had made no representation as to the suitability of the site. 137 Keeran Pty Ltd was registered early in June 2014. 138 On 8 July 2014, Mr Singh received a further invoice from Geowash for $107,250 described as 'payment for purchase of Geowash franchise site in NSW'. 139 Mr Singh sent an email to Ms Ali on 8 July 2014 concerning the final instalment, as follows: Sanam as we been discussing from the very beginning, my budget is up to 230000 including everything, I have already made payments of over 140000, altogether. I have about 80000 left. 140 Ms Ali responded stating: Ok. I'm working on a tight schedule so please pay the $80,000.00 now so that we can progress and not hold up your design & build. As final costings come in we'll see what can be done with the balance. 141 Mr Singh responded: Sanam please let me know the 80000 will be the final instalment, as no more amounts are available. 142 Ms Ali responded as follows: As previously explained to you, the site has been costed and budgeted at $230,000 plus GST and we previously had discussions on this. Geowash can't fund working capital and I explained to you that GST you pay to Geowash is claimable back by you. Once I have the final costings, I can try to work something out there with the payment arrangements. I am being flexible by allowing the process to continue although you have indicated to me that you don't have the monies to pay in full at this stage. At the moment, all I know is, I haven't gotten the costings process started on-site yet because the license agreement needs to be finalised and sent back to inter park, and unless we have done that we won't be allowed access to the property. The rent will commence as of 1.8.2014 regardless and we need to in a timely manner engage the project managers to do their part. That is the reason why I am asking you to pay the $80,000 now and lets get the ball rolling and discuss the remainder at a later stage. 143 Mr Singh responded suggesting that the business start with two or three mobile carts and more carts can be added at a later stage once the business is up and running and that should bring the cost under control. 144 Apart from the clear concerns being raised by Mr Singh to ensure that costs were kept within his budget, the significance of the above exchange is the position being maintained by Ms Ali that the instalments of the purchase price reflect actual costs being incurred by Geowash in relation to the fit-out. Of course, this reflects the terms of the Disclosure Document and franchise agreement. It is inconsistent with the case advanced by Ms Ali and Mr Cameron that the parties agreed a lump sum purchase price and the instalments requested by Geowash were for payment of that purchase price. 145 On 10 July 2014 Ms Ali sent a further email to Mr Singh as follows: Yes I did confirm your Geowash Site would be $230,000.00. GST is a separate matter, its a tax, it doesn't form part of an investment. You also claim it back. And I really thought you would understand that as a given system of purchasing any business in Australia. Please see email below where I explained to you that I cannot include GST, doing so means I pay your GST then you claim it back? As I said before I am aware of you're [sic] constraints now and will assist as site is established but you cannot simply not proceed. How am I to design and build this site to have you open for business on the 1st of August, 2014 (3 weeks)? Please pay the $80,000.00 today so that at least I can continue to get things moving to set up the site, we can get site designed and move ahead, we can work out between the two of us how we can get the balance organised, I think you've seen by now that I'm quite easy to work with, I just want to get the store opened and earning you money, at the moment it's a dead investment. I can also wait for you to claim back GST before paying that component towards Geowash. We can work out a payment system between us without pressurising you. Please urgently remit the funds required to move ahead. 146 On 13 July 2014 Mr Singh and Keeran executed the licence agreement for the Domain car park site with InterPark. 147 The amount of $80,000 was paid on 16 July 2014. 148 On 20 August 2014 Ms Ali advised Mr Singh that the builders would be on site 'as of tomorrow'. 149 When Mr Singh paid the $80,000 he thought he would get a costs breakdown from Geowash for the work done on the site and planned to argue about it if he was asked to pay more than the $230,000 including GST. 150 On 25 July 2014, Mr Singh met with Ms Ali and Mr Cameron in the Domain car park. That time he was told by Ms Ali that the work for the site was going to progress in two stages. In Stage 1 the mobile carts would be used in the car bay area and for Stage 2 a more permanent set up with pressure washers would be built. In the meantime council approvals would be sought and everything would be up and running in a couple of months. 151 Mr Singh next visited the site on 8 September 2014 a few days before the site was due to officially open. He described the state of the site in the following terms: It appeared that not much building work had been done. There were no drainage points at the car bays and no work had been done on the storage area, which was full of rubbish. At that time, the only work that had been done was: (a) some painting work on the wall behind the car bays, roughly 15-20m long and 8 feet high. This was painted in a green paint that was very similar to the green colour of the paint that was already inside the Domain car park; (b) painting of two pillars; (c) installation of around 6-8 tube lights; (d) installation of two sets of taps but no plumbing for the washing machine or chemical dispensers and (e) installation of two sets of power points. 152 Later on the same day, Mr Singh took delivery of five Geowash washing carts accompanied by only two batteries. To operate the carts, one battery was needed for each cart. 153 Also on that day, Mr Singh received the following email from Ms Ali: I have some great news for you today. We will be commencing the training of your store on Thursday 11.9.2014. This means your store opens for trade as of this date. Garry will be e-mailing you a training action plan during the course of today. Garry will be conducting the training process which basically covers the 'Geowash Operations Manual' in a detailed manner. He will get in touch with you to coordinate the training schedule for the next two weeks. He is there to assist you in all of your store operational requirements on an ongoing basis. Can you please make yourself available full-time as of 11.9.2014? I will be there to oversee and launch the opening of your brand new store. 154 Significant in this email is the use of the term 'store'. This is consistent with Mr Singh's evidence that the arrangement agreed was for the provision of a car wash site. A later email on the same date advised that Geowash had decided to provide a sponsored employee 'to assist you in your staffing requirements for your store' at a cost of $4,380 per month. 155 Trading at the Domain car park commenced on 11 September 2014. 156 Immediately after the opening, Mr Singh raised the possibility of completing the fit-out in the downstairs section of the Domain car park. 157 In an email dated 19 October 2014, Mr Singh said: Sanam as you are aware that the site is not fully operational and the signage, electrician, plumber had not completed the jobs i was expecting that i should not be asked for the Franchise fees for the period till we finish phase-2. 158 On 8 November 2014, Ms Ali sent an email to Mr Singh in which she said, amongst other things: You purchased your Geowash store from us for $230,000 plus GST. This accounted for Cart Model + Traditional Car Wash in the dedicated car park bays only. There was no provision of a café in this setup. … To date, there remains a shortfall in the payment of an amount of $24,772 plus GST which we agreed would be addressed prior to undertaking of phase 2 works. … In your case, there is a difference, meaning we have already provided you a site with the cart model allocating the addition of the traditional hand car wash and detailing service either around your dedicated car park bays the Domain Car Park or at the downstairs existing car wash bay location, again within the car park. We have heavily invested into signage around the car park and continue to invest into improving signage options around the car park. 159 It is apparent from the terms of this email that two matters were being discussed. First, consistently with the evidence of Mr Singh, there were works to be undertaken to complete the traditional car wash in the dedicated car park bays. Separately, there had been discussions about relocating the site, before these works were undertaken, to another site where there might also be a café. However, what is clear from the email is that Ms Ali was requiring a further payment before undertaking those works even though the construction of a traditional car wash had always been part of the arrangement. 160 After that, the possibility of the Stage 2 works being undertaken on the ground floor (rather than the original location) and the approvals for that to occur continued to be pursued. 161 On 12 June 2015, Mr Singh sent an email to Joanna Mardjetko, the General Manager of Geowash, in which he said: Joanna just checking what is the progress for phase 2 work, I have a complaint that I never get any updates in written, do I have any say? I was originally advised that phase 2 work will be ready in 2 months which is overdue by 7 months now. I personally have no issue against you, as you were not part of Geowash at that stage. I've never been shown any plans, never been forwarded any sketches, any documents, is there any issue that I'm supposed to be kept at last to know what is happening at the site I run. I have paid all the investment upfront for the full site including proper washers, I was never in favour of these carts. I was convinced into it that pressure washers will be up and running within 2 months. Now even after our meeting with interpark the plan was actually changed from the things we discussed. I was again not even advised if the downstairs plan had been dropped. The signs that have been put at the time of opening are of no use, I am loosing money on a daily basis, I know you are trying but these things should have been thought before the opening of site. Trying is still not helping me, honestly this is not a work of any global brand. I can't even show this place to any of my friends or relatives as I feel embarrassed that I have invested nearly quarter of mill on this. 162 Mr Singh received an email in response from Con D'Urso described as National Operations Manager for Geowash, in the following terms: I understand your concerns with all of this. We are working towards having, a different set up for you shortly. But in saying this, you not being at the store when it rains and your staff member not clocking on in Ipos is a concern to us. If we move toward's the portable wash bay process you need to commit 100% towards your business. This may also means that you open on the weekends as well, as there are different people parking there on the weekend. You also must be opened even it rains as some people have their interior of their car cleaned. We are here to help, but sometimes things are out of our control so let's move forwards. 163 In June 2015, Mr Singh sent an email to Geowash asking to be assured that the downstairs option was in waiting and would be completed within the funds that he had already paid and that he understands that a café part would be extra. He complained that the establishment that he had got at that time was not even worth 10% of the investment he had made. 164 On 15 July 2015, Ms Ali sent the following email to Mr Singh: You bought the cart system with provision for water guns and equipment. You then put the system on hold as you wanted to move downstairs. You met with our builders onsite and it was decided to look at an alternative location. As you know we have worked hard to secure the approval of Interpark and then Challenger for the move. We were very successful in our proposal and draft drawings were prepared by our architects. You yourself know that the Trust has held this up with their refusal to take any action to either approve or disapprove the move downstairs. Con & Joanna have also been flown in and advised how rather than waiting for the Trust approval, which may never come, you consolidate the location you have and we build there to include a portable wash bay, water tank, pump and extra signage. At the time you have decided to wait further time hoping the Trust will act and put our plans on hold. Raj the strategy of waiting I believe was not wise. If you are struggling why don't you reconsider Con's proposal? Do you prefer to just sit there hoping that this approval will come? I remain ready willing and able to fulfill my obligations in our agreement but I cannot whilst you wait for an organisation that clearly is not in any hurry. I also cannot be responsible if you don't allow us to build at your existing location. You income, or lack of it, is directly as a consequence of this waiting. As far as I see it, there are two choices, let's get moving and get your business performing at your current location or you choose to wait for the Trust. If you elect for the second choice I cannot predict how long you will wait or even if indeed your move will be approved. Please think about this carefully Raj, I care about your predicament and am here to get this moving if you allow it. 165 On 24 July 2015, Ms Mardjetko sent an email to Mr Singh (copied to Ms Ali) in which she stated that she had confirmed with Ms Ali that the chosen location 'was a combination of the two models - firstly the traditional set up at the dedicated 6 car park bays and the Geowash cart model which is a standard model at the multi-level car park site'. 166 In August 2015 there were discussions about an upgrade at the then current upstairs location. 167 There followed an extended dispute as to whether the improvements that were to be made to the upstairs site were consistent with what had been agreed. Complaints were raised about the extent of signage and the fact that there was to be no proper drainage, no proper pressure washers or a setup for a grease-trap. 168 Geowash never completed a traditional car wash site for Mr Singh and Keeran.

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Tejinder Singh Chhina and SSS WA Services Pty Ltd (South Fremantle/Beaconsfield) 169 Mr Tejinder Singh Chhina is from Punjab in India. He moved to Australia in 2010. In India he worked as an engineer. In Australia he has worked mainly as a taxi driver until his involvement in a company that operated a Geowash franchise in Beaconsfield, near Fremantle in Western Australia. 170 The Geowash franchise was the first business in which Mr Chhina had been involved. 171 Together with two others, Mr Hardevinder Singh Randhawa (Harry) and Mr Sukhdeep Singh, Mr Chhina arranged to incorporate SSS WA Services Pty Ltd to become a Geowash franchisee. They are the three directors and shareholders of the company. 172 It was suggested in cross-examination of Mr Chhina that because he had chosen to incorporate a company, that showed that he had some knowledge of sophisticated business concepts in Australia. His responses demonstrated that he did not have such a sophisticated understanding. He said: [M]y accountant helped me to make a company, because to get a business I need to have some companies, so we registered in ASIC and my accountant made that company for me. 173 When asked about his understanding as to what a company meant he said that to get a business you have to have a company attached. 174 In late 2013 Mr Chhina began to look for a business that cost around $150,000. He and his colleagues wanted a business that was within that budget and would be simple to run. They looked at restaurants, buying a taxi plate and then heard from others that a car wash business may be a good business. He made contact with Geowash in December 2013 and spoke to Ms Ali. 175 Mr Chhina made his initial contact with Geowash after searching on 'businessfranchise.com'. He did not receive the Franchise Overview. 176 After an initial phone conversation with Ms Ali, he received an email from her (copied to Mr Cameron) in the standard form describing the Geowash Business Opportunity. 177 The email said that Geowash sites ranged from $85,000 to $250,000 for a fully fitted out outlet 'which includes a fully fitted out Geowash outlet, chemicals, training, supervised onsite launch and extensive ongoing support'. The email stated that in order to proceed Geowash would need a $4,000 fully refundable deposit on the franchise fee and he would be provided with disclosure documents. If he proceeded the deposit would be offset against the franchise fee 'and we start looking for your site to get you up and running in your own cash outlet'. 178 Mr Chhina arranged for the deposit to be paid. It was paid on 23 January 2014. 179 On 4 February 2014, Ms Ali sent an email to Mr Chhina attaching the Disclosure Document and the franchise agreement. He did not read the Disclosure Document or franchise agreement thoroughly. He did not take any legal advice about the documents. He just signed them. 180 He understood that Geowash would then start searching for a site. After the documents were signed, Mr Chhina received an email with an invoice for the establishment fee of $38,500 less the deposit already paid. He arranged to pay $34,500 to Geowash by bank transfer on 21 February 2014. 181 In early March 2014 Mr Chhina exchanged emails with Ms Ali about potential sites for the business. He had mentioned his budget and was looking for a site on that basis. The sites had not been secured by Geowash in any way. They were sites that were then being advertised on websites. Mr Chhina and his two colleagues went to look at the sites. Their preferred site was one in Beaconsfield. 182 Ms Ali and Mr Cameron came to Perth on 11 March 2014. Mr Chhina met them at the airport and they visited various sites on 11 and 12 March 2014. His colleagues joined them for parts of the day. The sites did not include the Beaconsfield site. 183 They all met at the Pan Pacific Hotel on the evening of 12 March 2014. At that meeting Mr Chhina and his colleagues said they were interested in the Beaconsfield site. The following day Mr Chhina rang Ms Ali and said they wanted the Beaconsfield site. She responded that the site was more expensive at $250,000. Mr Chhina said the most that they could pay was $220,000 including GST. Mr Chhina said that because he thought the extra funds could be borrowed from the bank. 184 On 13 March 2014 Ms Ali sent an email to Mr Chhina confirming that they wanted to proceed with the Beaconsfield site, congratulating them on their decision and enclosing an invoice for $118,250 (including GST) described as 'Part Payment for Purchase of Geowash Franchise Site in WA'. The covering email said: Please find attached Invoice relating to the purchase of your Geowash Franchise. Please attend to the payment as your next step. Once you have made the payment our staff and management team then commences/continues the management process of discussions with Planning Officers, Engineers, Senior Design Draftsmen, Council, Builders, Leasing Agents, Solicitors etc. Once you have completed the first step of this stage, we will then proceed to step 2 of formally securing the site for you. 185 About this time, Mr Chhina received a telephone call from Mr Barjesh Kalyan who said he was the Geowash master franchisee. He told Mr Chhina that he would pay $250,000 for the Beaconsfield site if Mr Chhina could not pay that much. He also received a call from Mr Cameron saying that if he could not pay $250,000 then he should leave the Beaconsfield site. 186 Mr Chhina spoke to Ms Ali. They discussed the standard of fit-out that would be arranged for the site. Ms Ali said that the fit-out would be the same as for the Magic Hand car wash on Canning Highway. Mr Chhina said that if he was going to pay $250,000 then he would need a loan. Ms Ali said that Geowash could assist with arranging a loan. 187 On 14 March 2014, Ms Ali sent an email to Mr Chhina stating: Further to our conversation earlier today in relation to you wishing to purchase something for $200,000 plus GST; I have discussed this option at the Head Office and I refer to my email below. Unfortunately, you would not be able to secure the Beaconsfield site for anything less than $250,000 plus GST. 188 Mr Chhina discussed the amount of $250,000 with Mr Harry Singh and Mr Sukhdeep Singh and they agreed to pay that amount for Beaconsfield. Mr Chhina told Ms Ali of their decision. Ms Ali sent an email confirming they were proceeding with Geowash Beaconsfield 'at a purchase price of $250,000 plus gst'. 189 On 16 March 2014, the invoiced amount of $118,250 was paid. 190 A further invoice for $118,250 was sent by Ms Ali on 13 May 2014. This was about the time that the local council gave approval of the building plans. 191 The invoice was paid as to $105,000 in May 2014. This was paid using funds that were borrowed from the ANZ Bank with the assistance of a contact arranged by Ms Ali at the bank, with Mr Nimish Solanki. The balance was paid in June 2014. 192 The Beaconsfield/South Fremantle site was opened on 15 August 2014. 193 Mr Chhina gave evidence of the extent of works undertaken by Geowash to convert the site from a vacant used car yard. He said: In general, I was very disappointed with what I saw, considering all the money that was supposed to have been spent on the site. All that was done was the middle partition in the office was removed to make it one room - now the café area, a ramp was put in the front door for wheelchair access and the one toilet was converted to accommodate disabled access. Geowash had also put another entrance to the room to be accessed from the washing bay, vacuum bay and final bay. The café was repainted but otherwise the building was unchanged. Outside, a concreate wash pad had been laid and a tin roof had been put up to cover the washing area. I sent an email to Sanam that day about my concerns. 194 The significance of this evidence for present purposes is that it suggests that the total amount paid was not reflected in the degree of work undertaken. 195 What is evident is that the amount charged to establish the Beaconsfield site was not determined by reference to any measure of actual cost. Rather, the amount of $250,000 plus GST was presented as the amount that would have to be paid to secure the site. If it was not agreed then the site would be taken by the master franchisee. 196 Mr Chhina also gave evidence about problems at the site after he took possession. I do not find it necessary to make findings about these matters. 197 There was also a dispute after that about whether there had been proper remittance to Geowash of payments due under the franchise agreement based upon sales. Mr Chhina was cross-examined about those matters. He denied them. No reliance was placed upon these matters in closing submissions for Ms Ali and Mr Cameron and I make no findings about them. 198 Geowash did deliver a franchise site to SSS WA Services, Mr Chhina and his colleagues.

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Harvinder Brar and B Company for You Pty Ltd (Northbridge) 199 Mr Brar was born in India. He completed a diploma in electronics and communication engineering at a Polytechnic College in Punjab, India. He came to Australia as an international student and completed a diploma in community services work at TAFE SA and a diploma in business management at a private college. After that he worked in Perth as a disability support worker from 2012. He saved about $40,000 to start a business. He read the Geowash website and saw that it said that a business would cost between $85,000 and $149,000 and made an inquiry on 6 June 2014. He received an email from Mr Cameron. Amongst other things, the email said: Prime site exclusive territories are available from $149,000 plus GST (inclusive of negotiated lease, shop fit out, all equipment fixtures and fittings. establishment of business with the set up and initial ongoing customers and our fixed site model of a combined cafe and car-wash business is an investment of around $300,000 plus GST which is a complete turnkey business … The prime site model is all that you require to make money from the first day of operation. In this offering we will negotiate the site lease on your chosen site, apply for all the relevant Car Wash and Cafe/Food permits, build the business on site and provide every item required to commence operating your business … Please see attached our Franchisee overview … 200 As to the costs of establishing a car wash café, under the heading 'Geowash Hand Car Wash Set-up Costs', the Franchise Overview said 'Geowash Hand Car Wash Prime Site Ranges from $89,000 (multi-level car park) to $250,000 (Carwash and Café) plus gst'. It provided a list of costs for a Car Wash Café Style Franchise that added up to $244,000. It said that the cost ranges from site to site and included a note that some costs can vary depending on the site. The list of costs included a franchise establishment fee of $35,000 and a component of $160,000 for 'site set up, design, fit-out etc'. 201 The reference in the email to $300,000 must be understood in the context of the content of the Franchise Overview to which it referred. The email indicated a turnkey price for a 'fixed site model'. It did not state that all hand car wash and café sites would cost about that amount. A statement to that effect would have been completely inconsistent with the greater detail in the attached Franchise Overview which is directed to Mr Brar as the recipient of the email. Further, as the email and attached Franchise Overview was the first communication from Geowash about the franchise, it is to be expected that it would have been read and considered by Mr Brar. 202 Mr Brar then spoke to Mr Cameron on the telephone and expressed an interest in establishing a Geowash business in Ellenbrook. In that conversation he said that he had been looking at Magic Hand car wash businesses but they are a bit expensive. Mr Cameron said Magic Hand charges around $350,000, but Geowash can do the same outlet for around $225,000 and shopping centre sites for only $85,000. He also spoke separately to Ms Ali who contacted him. 203 After that he received another email from Mr Cameron that attached the Franchisee FAQs document 'to assist with your research'. It began, 'Hello Harvinder, It was good to discuss the opportunity over the phone'. The email did not refer to any dollar amounts. It was clear that it was directing attention to the Franchisee FAQs document for the purpose of providing information about the franchise. 204 The email from Mr Cameron included the following statement: The FAQ document is being updated on as ANZ now provide a minimum of 50% finance for purchasing a Geowash Franchise and have approved our first applicant for a Car Wash Cafe site in Perth. The finance is secured against the Geowash Franchise Agreement. More than 50% is available on a case by case basis. 205 The Franchisee FAQs referred prominently to ranges between $140,500 and $350,000 as the 'total initial investment' (which, in context, included the franchise fee). As to payment of the initial investment it said: You pay franchise establishment fees of $35000 plus GST to become part of the Geowash brand. You pay 50% of the balance of your purchase price upon selection of your site. You pay 50% remainder upon commencement of site construction/setup. 206 Later in the Franchisee FAQs it said: The estimated total investment for an individual franchisee is between $140,000.00 to about $350,000.00 plus GST. If you have completed the franchisee sign up process in the 2013/14 financial year, the costs for your Car Wash Cafe business will be around $250,000.00 plus GST. 207 There is other evidence to the effect that around this time Geowash was offering franchises for an amount capped at $250,000. 208 Mr Cameron said in his evidence that in the initial telephone conversation he told Mr Brar that the Geowash 'hand car wash café model franchise starts from $300,000 plus GST onwards'. He said that Mr Brar then asked about how the process works and also asked 'Do I pay it all up front in advance?'. I do not accept this evidence. A statement to the effect that the cost of a hand car wash café 'starts from $300,000 plus GST onwards' would indicate that $300,000 was the lowest price. A statement of that kind would be entirely inconsistent with the contemporaneous documents sent by Geowash to Mr Brar which were all expressed in terms of a range and referred to much lower prices. The reference in the initial email to 'around $300,000' for a 'fixed site model' as a 'turnkey price', in context, suggests that there may be lower prices. Further, it is not supported by the evidence of dealings with other potential franchisees where prices capped at $250,000 were being offered by Geowash in order to secure franchisees. 209 Mr Cameron's further evidence that when Mr Brar was told that the café model starts from $300,000, he simply said, in effect, 'do I pay it all now' is without any credibility. The conversation was an initial inquiry. After the conversation, Mr Cameron sent Mr Brar an email to assist with research which included a statement that the Franchisee FAQ document was being updated as to ANZ finance. It did not suggest that the lower amounts for the total investment were to be corrected. Importantly, as I refer to below, a few days later when Mr Brar came to complete his application for a franchise he said that he had allocated '200-300K' to invest in the business and that depended upon the location and model selected and savings plus bank loan. This shows that Mr Brar was still considering what type of franchise he might seek to establish and that he did not have access to the funds to pay $300,000 'up front' but needed a bank loan. Mr Cameron's version that the conversations with Mr Brar were to the effect that the costs started from $300,000 and that was an amount that Mr Brar was willing to entertain paying up front is entirely inconsistent with this contemporaneous record and consistent with the evidence given by Mr Brar as to the initial conversations. I do not accept Mr Cameron's version of the conversations. 210 On 12 June 2014, Mr Brar met with Ms Ali and Mr Cameron at Perth Crown Casino. Mr Cameron said to Mr Brar that if he paid more than $150,000 he could get a café site. Mr Brar explained that he and his partner could afford up to $100,000 with $10,000 from his parents. 211 Mr Cameron then raised the possibility of Geowash assisting with a loan so he could get a car wash site with a café that was like the Magic Hand car wash in Victoria Park at a cheaper price. He said that the costs would be between $200,000 and $300,000 and Geowash could definitely get a loan for 50% of the overall cost and it could go up to as much as 80%. 212 The next day, Mr Brar sent an email to Mr Cameron saying that he had decided to join Geowash as a franchisee and was ready to pay his deposit of $5,000. Ms Ali sent a response attaching an invoice for the deposit and the Your Next Step document. 213 Mr Brar read the Your Next Step document when he received it. He completed the attached application form in his own hand. In the application form Mr Brar listed his previous work experience as being 'taxi driver, farm worker, car washer and labourer at truck loading station'. He said that he had been the manager and owner of a family car wash station in India for three years and he sold it when he left for Australia and used the money to pay for his studies. In response to a question concerning the capital that he had allocated to invest in the business he responded '200-300K (Depend upon the location and model offered/selected SAVINGS plus BANK LOAN'. I find that these statements made before there was any dispute and well before any investigation by the ACCC were accurate. 214 Mr Brar planned to establish the business with his friend Mr Sran. He grew up with Mr Sran in India. When paying the deposit for the franchise he provided details to Geowash of a brand new company that would be trading under the franchise and he included the name and address of Mr Sran. The company was said to be B Company for You Pty Ltd (B Company) which was 'Under Process'. There is no evidence concerning the business experience of Mr Sran. There is no indication in the evidence that Ms Ali or Mr Cameron or anyone else on behalf of Geowash made any inquiries concerning the background of Mr Sran, his financial circumstances or his degree of business acumen. 215 Mr Cameron gave evidence of a different version of the conversation at Crown Casino on 12 June 2014. It did not include the reference to the Magic Hand car wash. It also made no reference to obtaining finance from the ANZ. It was to the effect that Mr Brar began by saying he had received the emails and he understood that a shopping centre site can cost from around $149,500 plus GST and a hand car wash café can cost from around $300,000. Therefore, on Mr Cameron's version it was Mr Brar who had indicated the amount of $300,000 (not a lower figure) and he then asked about the process of becoming a franchisee. This was significant evidence in the context of the case advanced by the ACCC which was to the effect that Ms Ali and Mr Cameron dealt with franchisees by finding out their maximum budget and then dealing with franchisees on the basis that the maximum amount (or more) was the amount that was required to be paid irrespective of any estimate of actual costs associated with establishing the franchise, including the fit-out. 216 I do not accept Mr Cameron's version because, for the following reasons, it is inconsistent with the contemporaneous documents in a number of respects and also with aspects of his own oral evidence. 217 First, the documents sent to Mr Brar by Geowash provided information about a range and Mr Brar stated a range when he made his application. 218 Second, it was Mr Cameron who raised the prospect of finance from ANZ in his second email on 6 June 2014. He said the finance would be for a minimum of 50%, or more on a case by case basis. In that context Mr Brar's version that there was a conversation about obtaining finance is more plausible. It is also plausible, given the terms of the email, that Mr Cameron indicated that Geowash could obtain a loan for 50% of what it would cost and that the amount might go up to as much as 80%. 219 Third, the evidence of Mr Brar that a range between $200,000 and $300,000 was discussed is supported by his application form where he refers to the capital allocated to invest being '200-300K' depending on savings plus bank loan. The reference to a bank loan in the application form completed a few days after the meeting at Crown Casino also supports Mr Brar's version of events. 220 Fourth, in his oral evidence, Mr Cameron made repeated references to Geowash competing with Magic Hand and offering a lower price to Geowash franchisees. It was said to be part of the business model to do work in-house to be competitive. In the context of that evidence, it is likely that the Magic Hand car wash business as an alternative for prospective franchisees was discussed and that Mr Cameron made the case that the costs of a Geowash franchise would be less than Magic Hand. 221 The Your Next Steps document that was provided with the invoice to Mr Brar for the deposit referred to an offer to be made by Geowash for the purchase of the rights for a selected site and payment to purchase the Geowash franchise. It did not specify a price. It indicated only that an offer would come from Geowash at a later time as part of the 'Second Stage'. 222 As Mr Brar said in his oral evidence, he knew that there would be a final price for the franchise that would relate to the particular site and the features of the franchise business that would be established at the site. His evidence, which I accept, was that first it was necessary to find a good site and then costing would be discussed. He was told that Geowash could work to make the site affordable and that he would be invoiced for the establishment fees of $35,000, 50% of the balance of the purchase price upon selection of the site and 50% of the remainder on commencement of site construction. Whatever the final price might be, that was how he was to be invoiced. 223 On 18 June 2014, Ms Ali sent the Disclosure Document and franchise agreement to Mr Brar by email stating that hard copies had been sent by mail for signing. The covering email said that the next step was to sign the agreement after 14 days and pay the balance of the establishment fee of $33,500 (GST inclusive). When he received those documents he knew he had 14 days to review the documents and to do his due diligence. He knew he could seek legal opinion and business advice. 224 On 19 June 2014, Mr Brar and Mr Sran established B Company. They each became directors and shareholders. It was put to Mr Brar that he knew that he had an obligation to ensure that the company could always pay its debts and that by establishing the company he showed that he had a sophisticated understanding of business. He agreed with those propositions. However, Mr Brar's agreement does not establish that he was a person with a sophisticated business understanding or that he presented in that way to Ms Ali and Mr Cameron. In particular, there is no indication that Mr Brar or Mr Sran had previously been involved in operating a company or managing a business in Australia. The transaction being discussed by Geowash with them involved borrowing a substantial amount in order to establish a Geowash franchise. There is no indication that they had borrowed funds before or had undertaken any analysis to show that the franchise might support the level of borrowing being discussed. 225 The level of Mr Brar's sophistication and understanding as evident to Ms Ali and Mr Cameron is better revealed in his communications with them. On 21 June 2014, Mr Brar sent an email to Ms Ali. It included the following: Can you please provide me some information about the finance area, I know about the basic amounts involved in setting up car park car wash and café car wash but my partner want to know in more detail like how much money we need to deposit in bank to get the 50% unsecured loan and how much they will approve in total to spend on the project. Is it possible to put all the expenses on one list to show the bank or you got some other way to get the bank help. I am reading through the disclosure documents and got some idea about the funds. Can you please guide me about the whole process which bank we will go to and what are things required so that I will arrange it as we are trying to find out the location for our business. 226 Ms Ali responded by email on 22 June 2014. Included in her response was: ANZ have advised us that they can assist our franchisees with their funding requirements by providing a minimum 50% of the investment required for a Geowash Franchise. For your application you would require the following : - 1. An executed Franchise Agreement, 2. An executed Lease (they can conditionally approve you with the offer to lease) and release the funds once the executed lease documents are provided. 3. A generic site specific business plan. Harvinder, the process from here is systemised and will lead to the set up of Your Geowash outlet. I will organise a trip to Perth on the week beginning 30th of June. We will have shortlisted some sites for you to review so as soon as you have executed your franchise agreement after the 14 days disclosure period (i.e 2.7.2014), we can commence and progress you to the next stage of the process which will also include submission for any sites you have asked Charles to investigate. The Geowash team and I will be personally working with you on this to take you through to the set up of your own Geowash Franchise outlet. At Geowash we value time and our main focus is to systemise and stage the setup of your brand new car wash franchise in an efficient and timely manner. We will work very hard at our end to ensure that we stick with our target timeframes and open your site up as soon as practically possible. We place focus on continuously innovating and improving our systems. At the same time, we do place emphasis on you complying with all your responsibilities as a Geowash Franchisee to avoid any unnecessary delays in the setting up of your brand new car wash site. 227 I note the reference to ANZ providing 'a minimum 50% of the investment required for a Geowash Franchise'. This is consistent with Mr Brar's evidence that he was told by Mr Cameron that funding could be more than 50% and could be as much as 80% and that Geowash could help with a bank loan. 228 On 30 June 2014, Mr Brar received an email from Ms Ali attaching copies of the signature pages for the franchise agreement which asked him to sign them and send them back (and stated that a tax invoice for the establishment fees would be sent). The tax invoice was sent 10 minutes later even though the agreement had not yet been signed. It stated that it was due for payment on 2 July 2014. 229 On 5 July 2014, Mr Brar sent an email attaching the signed execution pages. His covering email included the following: I attached the agreement papers to this email … I will make sure on Monday morning I will pay you all the funds if not I will pay you 25000$ on Monday and rest within next couple of days as they reach in my account from my partners account. I got 50000$ here in Australia for my investment and my partner promised me to invest 50000$ in our car wash as well. So my understanding is if we invest 100000$ towards car wash business we can get the help of bank for rest 50% or so. If the site is very good and I require more money then I can manage it by adding a silent partner to my company. 230 Again, the content of the email in referring to an investment of $100,000 and help from the bank 'for the rest 50% or so' is consistent with Mr Brar's account and inconsistent with the evidence of Mr Cameron. 231 Before signing the execution pages, Mr Brar called Mr Sran who was overseas and he told Mr Brar to sign the agreement for him and Mr Brar did so. Mr Brar says that these circumstances as to signing were communicated by Mr Brar to Ms Ali and Mr Cameron at a subsequent meeting in the restaurant area of Crown Casino. Mr Cameron says there was no such discussion. 232 Something was sought to be made of this in cross-examination. At many points in his oral evidence, Mr Brar accepted propositions put to him by way of cross-examination. However, when it was put to him that he did not have a conversation with Ms Ali and Mr Cameron in which he told them of the circumstances in which the execution pages had been signed, he was clear in maintaining that the conversation had occurred. 233 Mr Brar said that he told Ms Ali and Mr Cameron that he had signed the documents at the request of Mr Sran and he did so at a further meeting in the restaurant area of Crown Casino. He said he could not recall the date but it was after he had signed the signature pages for the franchise agreement. 234 Mr Cameron says that the meeting at Crown Casino was on Friday evening 4 July 2014 and was before the signature pages were sent to Ms Ali. There is some support for this evidence in the content of the email of 5 July 2014 (a Saturday). It refers to Mr Brar not being able to transfer funds and he states it was 'embarrassing for me that I was unable to finish my tasks on time as I told you it will be done Friday evening'. The email also refers to an understanding that when $100,000 was invested then he and Mr Sran could get help from the bank 'for the rest 50% or so'. Mr Brar's evidence was that figures of that kind were discussed at the meeting in the restaurant area of Crown Casino. This suggests that there was a meeting the previous evening at which these matters were discussed. Accordingly, I find that the meeting took place on the Friday evening. 235 At the meeting, Mr Brar was present with Ms Ali and Mr Cameron. A number of matters were discussed. Mr Cameron proposed that a site could be set up on a Shell service station site for around $200,000. Mr Brar expressed concern about that amount being too expensive. Ms Ali said that the site would be exactly the same as a Magic Hand car wash. They discussed applying for a loan. Mr Brar said he would need a loan of 50% of a $200,000 site. They talked about how they would look for a site once the deposit of $5,000 was received. 236 Mr Brar says that they also discussed the manner in which the signing page had been signed by him. I find that those matters were not discussed at the meeting because it took place before the signed pages were provided by Mr Brar to Ms Ali and because Mr Brar made a commitment at the meeting to provide the signed pages. Otherwise, I do not accept Mr Cameron's version of what occurred at the Friday evening meeting. Mr Cameron says that nothing was discussed other than a communication that Mr Brar and Mr Sran wished to proceed and a response by Ms Ali that they should send through the signed agreement and pay the balance of the establishment fee. I find that it is extremely unlikely that the parties would arrange to meet but their conversation would be confined in the manner stated by Mr Cameron. 237 Significantly, Mr Brar had already sent an email to Ms Ali on 13 June 2014 stating that he had decided to join Geowash as a franchisee and wanted to act fast in choosing a site. Ms Ali had sent an email to Mr Brar congratulating him and asking for the application details. Those details had been provided on 16 June 2014. Ms Ali had sent Mr Brar the disclosure document and had already sent the invoice for the establishment fees 'for Purchase of Franchise Site in Western Australia'. In that context, the evidence of Mr Cameron to the effect that all that was communicated at the Friday evening meeting was a commitment by Mr Brar and Mr Sran to proceed is not credible and I do not accept it. 238 It is possible that Mr Brar did tell Ms Ali and Mr Cameron at some time other than the Friday evening about the way the signing pages had been completed. However, on the evidence, I am unable to make a finding as to whether there was a subsequent discussion about the manner in which the pages had been signed. 239 After the Crown Casino meeting, the franchise establishment fee was paid. 240 The next meeting between the parties took place in late July 2014. At that time, Mr Brar and Mr Sran met with Ms Ali and Mr Cameron at the Pan Pacific Hotel. Mr Cameron said that they could get a site with a café for $200,000 plus GST or it could be $225,000 plus GST. It would depend on the site. He said that the more they put in the more the bank would lend and then they would end up with a better site. Mr Brar said that he didn't have any more money and did not want a better site. 241 The above account in the previous paragraph is taken from the evidence of Mr Brar. Mr Cameron gave a different account of the conversation. He said that Mr Brar said they were thinking of buying commercial properties and owning the land and they had friends who were interested in buying. He said that they were thinking big and wanted long term leases of 10 years. Having regard to the course of dealings to that point and subsequent events dealt with below, I reject this account given by Mr Cameron as not being plausible in that context. 242 At the end of July 2014, Mr Brar, Mr Sran, Ms Ali and Mr Cameron inspected a number of potential car wash café sites. They identified a site in Northbridge as their preferred site. 243 On 4 August 2014, Mr Cameron sent an email attaching an invoice for $110,000 (including GST) for 'Stage Payment - Purchase of Franchise Site in WA'. It referred to 'attached as discussed'. 244 On 19 August 2014, Mr Cameron sent a new invoice dated 4 August 2014 which was for $77,000 and requested payment on 22 August 2014. 245 There is a contest on the evidence of Mr Brar and Mr Cameron as to what led to the reduction in the invoice. Mr Cameron said it was done because of a request from Mr Brar for a payment plan. Mr Brar said it was done because Mr Cameron had agreed at the meeting at the Pan Pacific Hotel that all they would have to pay out of their own money was $77,000. 246 I prefer the evidence of Mr Cameron because it is supported by the sequence of events about the invoice. It was first issued on 4 August 2014. On Mr Brar's version of events he says he was upset because it was not for the agreed amount of $77,000 and he rang Mr Cameron and complained and said he could not go ahead and he wanted his money back. Mr Brar says that Mr Cameron agreed to send a new invoice for $77,000 and that other money could be obtained from ANZ. 247 However, the documents show the following course of dealings. 248 On 6 August 2014, Mr Cameron sent an email confirming the Northbridge site and stating 'you have now progressed to the next stage of your purchase of Geowash Hand Car Wash Franchise'. The email attached an invoice for $110,000 (including GST). The email said: Once you have made the payment our staff and management team then commences/continues the management process of discussions with Planning Officers, Engineers, Senior Design Draftsman, Council, Builders, Leasing Agents, Solicitors. 249 There followed a list of activities. The email also said that once payment had been made 'we will then proceed to the next step of formally securing the site for you, taking it off the market (includes not offering this site to any other franchisee) and fly to Perth to start the many tasks outlined above'. 250 I note that before me there was a version of the email of 6 August 2014 behind which had been inserted a copy of the invoice for $77,000. However, this appears to be an error because both Mr Brar and Mr Cameron say that the replacement invoice for the lower amount (which was also dated 4 August 2014) was sent on 19 August 2014. 251 In the meantime, on 6 August 2014, Mr Brar sent an email to Mr Cameron referring to the invoice for $100,000 without objection. He said that he had forwarded the invoice to his partner 'and he assured me about the funds'. The email then said: He want to get more information about the project with approximate costs involved. He also want to meet the banker to ask some questions and opening business account for the loan purposes He want you to work with the owner of the site in renovating the site as it will help us reducing the cost and getting some benefit from paying high rent … And also he want to how much is cost of building a cafe and how much is the expected earnings of cafe and car wash 252 The terms of the email do not sit with Mr Brar's account that at this time Mr Cameron had agreed that $77,000 was all that he and Mr Sran had to pay out of their own money. If there had been agreement to that effect then it would be expected that the agreement would be referred to in the email rather than a request for information about the project costs. 253 In his email, Mr Brar asked for these details to be provided to Mr Sran at a specified email address. A few hours later, Mr Cameron responded stating, amongst other things: Depending on level of fit out this site will eventually cost you around $275,000.00 plus GST You can make your own inquiries at banks. We can send you to an ANZ contact who can provide 50% against your Geowash franchise. You can apply once you can supply the signed lease [As to working with the owner about reducing the renovating cost] We have started negotiating this already and after the initial scope as per stage 1 of email I sent you today we can determine what works are required [As to expected earnings] As discussed we cannot supply earnings estimates, it is against the franchise code. 254 It is to be noted that the response gave a single figure about what the site will cost, but did not respond specifically to the question about the cost of building the café. There were no documents before me in which there was any contemporaneous record of any estimates of costs or any breakdown by which the particular 'purchase price' or 'cost' for the Northbridge site was ever determined. 255 Mr Brar's account about the $77,000 may be a consequence of an error on his part in the chronological account because there was a point at which the invoice for $110,000 was replaced with an invoice for the lesser amount at a later date. Mr Brar accepted in cross-examination that the written correspondence was to be preferred when it came to events concerning the $77,000. 256 In any event, what is shown by the dealings is that the quantum of the invoice was not connected with any estimate of likely actual cost by Ms Ali or Mr Cameron or anyone else at Geowash and the course of dealings involved Geowash, through Ms Ali and Mr Cameron, pressing for payment of an amount that they specified after discussing arrangements with Mr Brar arrangements to pay amounts that were increasing considerably from those that were discussed at the time of the initial inquiry concerning the franchise. 257 On 22 August 2014, Mr Brar met with a small business specialist at the ANZ. After the meeting he was sent a business plan template which required him to include a cash flow forecast, details of the franchise agreement and lease and other matters. 258 Mr Brar paid the $77,000 by three instalments. On 22 August 2014, Mr Brar paid the final instalment of $27,000 to Geowash. He took out a personal loan to pay that amount. Ms Ali responded 'Thank you for paying the invoice amount. Just to clarify this is not the final invoice amount, it is a staged payment as part of the cost of your business'. 259 At this time Ms Ali responded to Mr Brar's reference to the business loan of 50% 'as we discussed before' by saying 'OK -please confirm with ANZ what they can provide as if they can only provide you with 50% then they will basically give you double what you have paid to date. As per our previous correspondence the Northbridge site will cost $285,000 plus GST'. Ms Ali referred to some element of savings if the café was not included. She stated that the building component needed to be paid for prior to building commencing. 260 Significantly, these communications indicate that Geowash was charging an amount determined on the basis of actual cost, not some price agreed up-front. 261 At this time, Mr Brar also raised some issues with the Beaconsfield Geowash site which he had inspected describing it as very basic. Ms Ali responded 'Please understand that each site has a different cost'. 262 Mr Brar said that he wanted to be involved in the process of design and buying equipment and furniture. Ms Ali responded: More than happy for you to see the items that budget allows for furniture etc. Where an item you wish to upgrade costs more than we have budgeted for you can upgrade at the cost of the item as long as we can approve the purchase. Obviously you are buying a franchise and there is a look and feel and also equipment listing required to run the business and this is done by the Franchisor. Thats after all why you brought a franchise instead of setting up your own car wash. 263 Despite the reference to budget, no documents of that kind have been produced and relied upon by Ms Ali or Mr Cameron. 264 On 27 August 2014 Mr Brar sent an email to Ms Ali asking for various details for the business plan for ANZ. On 3 September 2014, Ms Ali sent an email stating that Mr Brar should attend to the request by ANZ and that all that he had to do was amend the cash flow statement and business plan that had been provided by ANZ. She said: We must assess your financial situation and ensure the Northbridge site is suitable for you by understanding your borrowing power with ANZ. I understand Barjesh has provided you with his business plan and cash flow statement. And all you have to do now is amend it as per your own goals and plans. 265 Mr Brar's evidence was that during the process of applying for the loan he spoke to Mr Cameron and he said that he should apply for a loan for $325,000 to cover extra amounts for staff wages and supplies. Mr Brar says he objected and said that he would have said no if he knew he needed all this money. He says that as a result he requested a loan of $325,000. Mr Cameron denies such conversations. 266 There followed communications about the business plan which was prepared with the assistance of Geowash. The business plan refers to a loan of $140,000 'to supplement the owners own equity capital'. I do not accept Mr Brar's evidence about applying for a loan of $325,000. It may be that he was intending to refer to a discussion about an overall franchise cost of $325,000 (including the establishment fee) and that was why the loan was sought for $140,000 rather than $100,000. The issue was not explored at the hearing. 267 In any event, the application for a loan was unsuccessful. Mr Brar arranged to withdraw from the Northbridge site. He discussed a possible carwash in a shopping centre and a site in Rockingham. 268 In October 2014, Mr Cameron assisted Mr Brar in seeking a refund of the GST that he had paid to Geowash on his establishment fee of $35,000 and the payment of $70,000. 269 On 29 October 2014, Mr Brar informed Mr Cameron that the Rockingham site was not suitable. In the email to Mr Cameron he said: As we discussed earlier when my loan application got rejected please find me shopping center site which will suite my budget. We already put 128000$ towards this business as per the plan. You said you will find very good shopping center site for me which will be in my budget 125000 - 149000$. Soon I will get my GST 10000$ back as you know already. I don't think we need to wait for one year. 270 Mr Cameron responded 'Ok Harvinder. We are looking for shopping centre sites. Obviously the shopping centre site will not have a building structure and same level of equipment at that investment'. 271 On 22 November 2014, Mr Brar sent an email to Mr Cameron and Ms Ali. It said: As you know i followed all the guidlines and procedure need to follow to eastablish the car wash cafe modal but bank refused to give a loan to me as i dont have any car wash industry experience in Australia. Namish your ANZ loan representative helped me a lot for which i am really thankful to him. I tried to get help from NAB bank of my own but they answered the same. It is very difficult to convince the bank without experience, budget forecast, survey to say positive income flow and most importantly Franchisor should have a strong credit relationship with that particular bank. They suggested me if my franchisor have that relationship with ANZ then i should stick with ANZ. l am really thankful to you Sanam and Charles, you tried to help me eastablishing my first ever business in Australia. But i think this is not the right time for me to start. I should get some experience first otherwise it is impossible to get unsecured business loan from bank. As Charles advised me to go for cheaper shopping center site i thought it will be good for me but now it looks it will cost me more money for which i have to try again with the bank after one year. I completely understand as Charles explained Sanam is trying to help me out and she is giving me one year to wait and apply for loan again. I discussed this option with my business partner and we thought if we waited and tried again it might spoil our credit history which will spoil my future. I think i am not the right candidate for this business at this stage. Please consider my request. I am requesting you Sanam please look into my finance account and please refund my money back into my company's account. 272 On 26 November 2014, Mr Brar followed up the email seeking a response. Ms Ali responded by email in the following terms: As already discussed with you you went ahead with the Geowash business assuring us that you had the funds to do so as you had a business partner who was going to assist fund the investment. You elected to borrow funds for tax purposes also but our agreement was not subject to finance. Names is not my representative, he works for ANZ and like your NAB contact reviewed your application which wasn't subject to finance or that would have been reflected in our agreement. We spent money showing you sites for you to choose from. As you know we also took architects and builders to the site. We travelled to Perth to view sites with you and met with you at the Northbridge site. Subsequent to this you advised of your changed circumstances because your business partner had elected to expend some of his funds set aside for his share of the Geowash cost to buy a supermarket. Again our agreement is not subject to those changed circumstances. Shortly after this you advised that you would prefer less of an investment for a smaller site and advised us that you want a shopping centre model like the Carousel shopping centre one. Now you advise instead of all of the above you'd just like your money back in full despite the fact that substantial funds have been expended in carrying out our obligations under the agreement. … I can assist where I can but unfortunately there is no provision in the agreement for Geowash to simply cancel the contract and refund funds used in the carrying out of the procedures that were carried out for you at a substantial cost. These were carried out in the expectation that you would adhere to your responsibilities under our agreement, you can't simply expect to abandon our agreement. … To put it as simply as I can, you have a contractual obligation to perform as per our agreement and I would expect you to. 273 The description by Ms Ali in the email about the circumstances in which Mr Brar came to be applying for finance in respect of his Geowash franchise is entirely inaccurate. On the facts as I have found, Mr Brar was encouraged to proceed on the basis that Geowash would assist him to obtain a loan and that a loan could be secured for 50% of his investment. Further, the franchise agreement signed by B Company, Mr Brar and Mr Sran provided that the franchisee must use reasonable endeavours to obtain a site, but if no site had been secured within 18 months then either party may terminate. In that event, provided the franchisee had complied with its obligations then Geowash was obliged to repay all monies paid less the 'Retention Amount' and 'Costs and Expenses'. The Retention Amount was specified as $20,000. The Costs and Expenses were defined as 'all reasonable costs and expenses incurred by Geowash to the maximum extent permitted by Legislation'. So, it was only actual reasonable costs relating to the particular franchise that could be recovered. 274 As I have explained earlier, the franchise agreements for all franchisees did not provide for payment of a 'purchase price'. Rather, they contemplated that payment may be made in advance for 'Fit Out Costs' as defined in the franchise agreement. The agreement with B Company had the original definition for such costs. It did not provide for Geowash to charge for its own costs in relation to the fit-out. 275 Therefore, the position adopted by Ms Ali in her email to Mr Brar concerning the payments that had been made was inconsistent with the franchise agreement. It was also inconsistent with my findings as to their dealings. There was no oral agreement that a 'purchase price' would be paid. Rather, there was discussion of an overall cost that would be incurred that would depend upon the type of franchise to be established. Ultimately, what was paid would depend upon actual costs. There would be two instalments to be paid. 276 Therefore, in November 2014, the position was not that B Company, Mr Brar and Mr Sran could not terminate the agreement. Rather there had to be reasonable further efforts to find a suitable site. 277 At that time, Mr Brar was requesting that he be provided with a copy of the signed franchise agreement and Disclosure Document. He provided a detailed email outlining much of the history of his dealings with Geowash. Ms Ali responded simply: 'Further to your emails, firstly, we will not be refunding any of the monies paid as part of your obligations under the Franchise Agreement. Please advise if you are going to proceed or if your intention is to rescind the franchise agreement'. 278 The position adopted by Ms Ali was inconsistent with the terms of the agreement and the discussions with Mr Brar. It proceeded from the false premise that Geowash had a right to retain all the amounts that had been paid irrespective of the circumstances. 279 By May 2015, Mr Brar sent the following email to Ms Ali: I have spoken to Garry (Master Franchiser WA) regarding my situation at this stage. As you know Sanam my bank loan has not been approved so I wouldn't be able to go with carwash-cafe modal at this stage. I tried hard but unfortunately no success. Please help me getting out of this hard time. As suggested by Garry I already spoken to my partner Amaninderpal about getting a smaller site which will fit our budget. I want to request you here on behalf of B Company For You Pty Ltd. please permit us to get into carwash only shopping centre site. I will be very thankful to you. 280 Ms Ali responded as follows by email on 12 June 2015 to Mr Brar, Mr Sran and Mr Gujral: As per previous emails to you I cannot simply vary our original agreement. The investment required for the Franchise business you committed to is substantially higher than the amount you ended up having. I understand at the time that you had financial pressures but I cannot be held responsible for your misfortune. Your problems in not being approved securing a loan to complete our transactions as per the obligations imposed on you in our agreement is not in my control. Indeed our arrangements were never subject to finance. I understand from you that Amaninder did not provide the appropriate visa to indicate to the lender he was a permanent resident. All I can suggest is to reapply but ensure the documentation you provide supports an approval. May be try another bank or look at other funding options. We expended much of your monies finding sites and negotiating lease for sites you had indicated approval of. I remind you, the ones you selected had a price point which you were well aware of. In light of your approval we spent funds on architects and flew builders in at expense to view proposed works. You not proceeding was a breach of your agreement, and whilst we attempted to secure another franchisee for that site we were not successful in time. The site as I understand is now leased. So as you can see I haven't banked your money waiting for you to add to it to secure you a site and build you a store. Management & consultants time have been incurred in ensuring I complied with my obligations to you. Even if I had a shopping centre site ready to give you, which I don't, you would need to have the ready money required to build the store. Its an unfortunate situation you are in and whilst I sympathise, I can't see what I can do to help. I can't and won't vary our current arrangements but am open to assisting where I can if you can secure the funds required for a store under a new agreement. Please let me know as I will help if I can. 281 I do not accept the statements made by Ms Ali about where the money was expended. Ms Ali had no records on which such a statement could be based. At no point did dealings with Mr Brar reach a stage where it would be reasonable or appropriate to incur costs on architects and builders. As I have found elsewhere, Geowash paid substantial commissions on monies received from franchisees. It is the payment of those commissions that would have accounted for a significant part of those funds. No accounting record was produced that itemised as part of an expense line in a ledger or other usual accounting record the particular expenditure that related to the franchise agreement with B Company. 282 On 13 August 2015, Mr Brar sent an email to Ms Ali asking for 'the details about the expenses from the total deposit money I gave you last year. Also the price for shopping center site. I need to calculate the difference so that I can figure out what options I have. You can understand without details nobody can understand what I invested how much spent and what I have left to use further. I need your help here Sanam please'. This was a request that was entirely justified given the terms of the franchise agreement and the dealings by Mr Brar with Mr Cameron and Ms Ali. 283 Mr Brar received no further response from Ms Ali or Mr Cameron. 284 Geowash did not deliver a franchise outlet of the kind discussed due a number of factors including the fact that finance was unable to be obtained by Mr Brar.

[27]

Jamal Khan Khalid and Western Care Pty Ltd (Geowash Palmyra) 285 Mr Khalid moved to Australia from Pakistan in 1994. He had previously been in the merchant navy. Since arriving in Australia, Mr Khalid has worked at McDonalds, as a TransPerth bus driver and as a part-time taxi driver. 286 Mr Khalid was cross-examined about his understanding of what it meant to be a director and shareholder of a company. It was evident from his answers that he did not have a sophisticated understanding of corporate structures. It was put to him that by reason of his handling of his dispute with Geowash and his involvement in applying for a development approval for a car wash site and establishing Impeccable Car Wash as a new business he was a successful businessman. He agreed that through those experiences he had become successful as a businessman but said that he had no business knowledge before he came to Geowash. I accept that evidence. 287 In 2014, Mr Khalid wanted to run his own business. He discussed the idea of a hand car wash business with his nephew Mr Syed Mansoor. He made some enquiries about a Magic Hand franchise. After that he made contact with Mr Cameron after reviewing the information on the Geowash website. He arranged to meet Mr Cameron at the Pan Pacific Hotel on 6 July 2014. Before the meeting Mr Cameron sent him an email enclosing the Franchise Overview. As with other franchisees, the email referred to prime site exclusive territories being available 'from $149,000 plus GST' and the fixed site model of combined café and car wash 'from around $300,000 plus GST'. 288 Mr Khalid and Mr Mansoor met with Mr Cameron and Ms Ali on 6 July 2014 (a Sunday) at the Pan Pacific Hotel. Mr Khalid told them that he and Mr Mansoor could only afford $300,000 plus GST with a 50% loan and no more. Mr Cameron said that the price would be capped at $300,000 plus GST and for that amount they would get a standalone site with a café like Magic Hand Carwash on Canning Highway. They were also told that ANZ would lend 50% of the price but may lend more. 289 Mr Cameron's version of the meeting was that the capped price was offered but it was for the type of fit-out that had been undertaken at the South Fremantle Geowash outlet on a site which had been a car yard. I do not accept this evidence. Mr Cameron gave other evidence about the Geowash model being set up to be competitive with Magic Hand. He described how the cost of a Geowash franchise was less than a Magic Hand franchise for various reasons. Also, the South Fremantle Geowash outlet in Beaconsfield was not opened until mid-August 2014 (and was the first outlet opened in Western Australia). So, at the time of the meeting it was not a completed outlet that might be the subject of a comparison. I note that Mr Chhina also gave evidence that Mr Cameron described the standard of fit-out that would be completed at the South Fremantle outlet by reference to the Magic Hand car wash on Canning Highway. It is a comparison with which Mr Cameron would have been familiar and, in that context, is likely to have been made. 290 Mr Khalid also said that he referred to the business on Canning Highway because he had seen it while driving his bus on Canning Highway. I find this to be a plausible account. Based on that evidence and my findings as to discussions with other franchisees comparing what Geowash offered with what Magic Hand was said to offer at a higher cost to franchisees I consider it likely that Ms Ali and Mr Cameron presented the Geowash offer by reference to the Magic Hand outlet on Canning Highway. 291 Mr Cameron's version of the conversation did not include any reference to finance from ANZ. However, given the evidence from other franchisees and the references in the documents to the availability of finance, I find it to be more likely that the availability of finance was discussed. Also, as Mr Cameron accepts that he said that a capped deal could be offered I find it to be likely, in that context, that Mr Khalid emphasised the importance of the cap in the initial conversation. I do not accept Mr Cameron's version of the conversation as to how the capped amount was discussed. 292 After the meeting Mr Cameron sent an email to Mr Khalid. It included the following: Stand Alone Car Wash Sites are around $300,000 plus GST (inclusive of negotiated lease, shop fit out, all equipment fixtures and fittings, establishment of business with the set up initial ongoing customers - turnkey operation) basically all that is required to make money from the first day of operation. As discussed your investment to build will be capped at $300,000.00 plus GST. In this offering we establish the management and staff at the premises, operate the business to ensure training and rosters and then it is handed over to you. 293 The email from Mr Cameron attached a version of the Your Next Steps document and the Franchisee FAQs. It included an application form to become a Geowash franchisee. 294 Mr Khalid and Mr Mansoor attended the opening of the South Fremantle Geowash outlet on 15 August 2014. Mr Cameron told him the site cost $280,000 plus GST to set up. Mr Khalid again said that he could afford up to $300,000, subject to the 50% financing loan. He and Mr Mansoor asked whether there were sites on Canning Highway. 295 Mr Cameron says that he told Mr Khalid that the capped email he sent was an offer for a site like Geowash South Fremantle which had been established on an old car yard with existing buildings that can be renovated. He says that when Canning Highway was mentioned he said to bear in mind anything on Canning Highway would be very expensive, well out of the capped price of $300,000. He says that Mr Khalid responded by saying that was fine and if a site could be found on Canning Highway 'we will find the extra funds'. I do not accept this evidence for a number of reasons. 296 First, it is inconsistent with the findings I have made about the initial conversation. 297 Second, it is unlikely that, as is common ground, a capped price was the subject of discussion at the initial meeting and expressly referred to in the follow-up email sent by Mr Cameron but then a few weeks later Mr Khalid was willing to entertain an open cost above the $300,000. 298 Third, Mr Khalid was a very frank and direct witness. He was asked questions in cross-examination about complaints he had made about Geowash. He freely admitted that he had been vocal in complaining about Geowash. He agreed he had driven around Perth with signs on his car about Geowash. He had posted videos on Facebook and YouTube. It was put to him that the video on YouTube had been taken down because a concern had been raised about it being defamatory. He agreed and then volunteered 'and then I put it again'. He also admitted that he told Mr Cameron that he was going to visit the franchising show in Melbourne and tell everyone about Geowash, but said that he did not go there. Mr Khalid's evidence that he made it clear that he wanted a capped price of $300,000 is consistent with the direct manner in which he gave his evidence. 299 Fourth, even though Mr Cameron took the trouble to refer in an email to the capped price he did not at any stage send an email saying that it was a capped price only if there was existing infrastructure that could be renovated. This would be a very important qualification and was never stated in writing. 300 Fifth, Mr Cameron's evidence on this topic is self-serving evidence of a kind that Mr Cameron has given about other conversations with franchisees which I have not accepted for reasons I have given separately as to those conversations. Therefore, I am circumspect about accepting his account. 301 The same afternoon, Mr Khalid and Mr Mansoor went to a site on Canning Highway in Palmyra that Mr Cameron told them was a potential site for a Geowash franchise. After inspecting the site Mr Khalid told Mr Cameron that they wanted that site and made arrangements to pay the $5,000 deposit. 302 Mr Cameron's evidence was that the conversation about the Palmyra site included a statement from him 'OK Jamal. I will try my best for you. Bear in mind, I cannot offer you the capped deal of $300,000 plus GST for this site'. I do not accept this evidence for the same reasons I have given concerning the conversation at the Geowash South Fremantle outlet. In addition, there are examples of emails being sent by Geowash to other franchisees after a site was selected setting out a formal record of what had occurred and that various sites had been presented and the choice had been made by the franchisee. These emails indicate a practice of recording in writing with franchisees the circumstances in which each site had been selected so as to make clear the context in which the choice had been made by each franchisee. In that context, if indeed there had been some qualification to the cap as applying to a particular selected site then I would expect any such qualification to have been recorded in such an email. However, there was no such email produced. 303 The deposit was paid and Mr Cameron sent through a Disclosure Document on 19 August 2014. The email also referred to payment of the establishment fees of $33,500 including GST. It also said that Geowash's solicitor would arrange for a hard copy of the Disclosure Document to be sent to them by mail. This accorded with the practice of Geowash once a deposit had been paid. 304 Mr Khalid and Mr Mansoor then caused Western Care to be incorporated. 305 Mr Cameron says that he had a conversation with Mr Khalid on around 29 August 2014. He says that he told Mr Khalid that the landlord had not agreed to perform any works as a landlord's contribution. Mr Cameron's evidence was that he then said to Mr Khalid that if he wanted the Canning Highway site then it would be a more expensive build as it is obviously not a South Fremantle site. Mr Cameron says that Mr Khalid said that he could work with extra funding and that he had access to money from overseas. 306 Mr Cameron said that if a capped amount had been agreed then it would have been included in the documentation as it had been with the franchise agreement entered into with Mr Rahul Kumar. I deal with the events relating to that franchise agreement below. Mr Kumar pressed for a number of changes to the franchise documents and it was in that context that a capped amount was included. In all other cases there were no amendments to the franchise documents. I find that the changes made at the insistence of Mr Kumar did not reflect the general practice of Geowash in dealing with other franchisees. In other cases documents were presented to franchisees and were signed. I reject this argumentative evidence as providing any support for Mr Cameron's version of his conversations with Mr Khalid. 307 On 29 August 2014, Mr Cameron sent an email to the agent acting for the owner of the site in Canning Highway, Palmyra. It said: It's all done. Franchisee has proceeded and agreed to terms. Signed acceptance attached. As discussed we will provide all infrastructure to build and vendor to allow three months after completion of build before rent commences. 308 I reject Mr Cameron's evidence about the conversation on 29 August 2014 for the following reasons. 309 First, for reasons I have given I do not accept that Mr Cameron discussed the capped price by reference to the South Fremantle site as a price that would not apply to the Canning Highway site. 310 Second, it is inconsistent with his own evidence. On his version of events Mr Khalid had already committed to finding the extra funds for Canning Highway and the capped price did not apply. The conversation that he recounts proceeds as if this earlier conversation had not occurred. 311 Third, given the terms of the email to the agent on 29 August 2014, if there had been a discussion with Mr Khalid at that time to the effect that he would have to pay additional costs associated with the infrastructure to be built then you would expect a matter of that importance to be put to Mr Khalid in writing and any agreed arrangements recorded in writing. In the absence of any such email exchange it is more likely that the infrastructure was to form part of the $300,000 capped amount that had been discussed. 312 On 2 September 2014, Mr Khalid and Mr Mansoor met with Mr Cameron and Ms Ali at Crown Metropol Hotel in Perth to sign the franchise agreement. This was the first time he had looked at the franchise agreement. He had not received the document by mail. Mr Khalid did not read the Disclosure Document, but he did read the figures in the schedule. He started reading the documents in detail for the first time when there was a dispute with Geowash. 313 Mr Khalid put the position concerning his understanding of the agreement in the following way when being cross-examined: To be honest, to make it simple for you, there was so many things was sent from Charles Cameron, but we were all relying on Charles Cameron regarding to how we will pay and whatever steps it was there, it was not taken properly. We were not explained, this is steps is this, this is step is this and this will take this. With regards to the - as you said the price, I was clearly told by them and I was clear by them that I cannot afford more than 300 plus GST. That was my maximum price. So there are so many documents which says this, that, but we have really good relation with Mr Charles Cameron as he was presented by him to us, and we were totally relying on him. 314 I accept this evidence as recording Mr Khalid's state of mind when he entered into the agreement. Further, on the basis of the findings I have made, at the time that the franchise agreement was signed by Mr Khalid, Mr Mansoor and Western Care, Mr Cameron knew that those parties were proceeding in the belief that the franchise set-up costs would be capped at $300,000 plus GST. Further, by reason of the evidence concerning the way in which Ms Ali and Mr Cameron dealt with each other in relation to matters concerning Geowash, I find that Ms Ali would also have been aware at that time of the arrangements in relation to the cap of $300,000 plus GST. 315 On 4 September 2018, Geowash sent an invoice for $33,500 (being the 'Establishment Fees for Purchase of Franchise Site in Western Australia' of $38,500 less the deposit of $5,000). 316 On 17 September 2018, Mr Khalid, Mr Mansoor, Mr Cameron and Ms Ali met with the owner's agent. The lease was signed. Mr Cameron says that they confirmed that the landlord would not make any capital contribution. He says that he told Mr Khalid and Mr Mansoor that the capped deal no longer applied and the cost to build could not be predicted. He also says that Ms Ali said to Mr Khalid 'Make sure you don't commit to something you cannot afford'. Again Mr Cameron says that Mr Khalid said that he could source funds from overseas if needed. I do not accept this evidence for a number of reasons. 317 First, Mr Cameron had already communicated the acceptance of the lease terms to the owner's agent. Second, the franchise agreement had been signed and the establishment fee invoiced after the owner's agent had been told that the set-up costs would be met. It would be expected that a conversation of the kind alleged would have occurred at these earlier times, if at all. Third, again there is no contemporaneous record to reflect the change to the capped amount. Fourth, it is inconsistent with Mr Cameron's own evidence (which I do not accept) which is to the effect that the capped amount had already been abandoned. The inherent inconsistency in Mr Cameron's evidence is a further reason for rejecting his account. 318 On 18 September 2018, Ms Ali sent an email to Mr Khalid and Mr Mansoor. The email said that 'you have now progressed to the next stage of your purchase of Geowash Hand Car Wash Franchise (Stage 2)'. It attached a tax invoice for $120,000 plus GST described as 'Staged Payment for Purchase of Franchise Site in 343 Canning Highway, Palmyra WA'. The email contained no estimate of costings or basis upon which the amount of $120,000 had been calculated. It contained very general information about the planning process for approvals. It stated: Please find attached Tax Invoice relating to the purchase of your Geowash Franchise. Please attend to the payment if you wish to proceed with Palmyra as your site. Once you have made the payment our staff and management team then commences / continues the management process of discussions with Planning Officers, Engineers, Senior Design Draftsman, Council, Builders, Leasing Agents, Solicitors etc. Please note, the town planners will be undertaking the following tasks to prepare and submit the Development Application and negotiate its approval and I will be overseeing and managing the process on your behalf … 319 Mr Khalid was surprised to receive the invoice for that amount at that time. He called Ms Ali. He said that he could not afford to pay that amount at that time. He referred to the fact that he needed to get a loan for half of the total amount. He then thought further and called back. Ms Ali did not answer. The next day, Ms Ali sent Mr Khalid an email about the conversation the previous evening. The email said: Further to our telephone conversation tonight, we have explained the process of payment to you previously. On 6.7.2014, Charles emailed you our Frequently Asked Questions document and that document also clearly outlines the process of payments:- At what stages, am I required to pay? You pay franchise establishment fees of $35000 plus GST to become part of the Geowash brand. You pay 50% of the balance of your purchase price upon selection of your site. You pay 50% remainder upon commencement of site construction set up. I made sure Charles asked if you had the funds available when you requested Palmyra and your answer was yes. We have strict procedures in place and have made commitments to the agent to ensure we receive the 3 months rent free and attractive lease that has been negotiated. We are commencing the process on Monday to prepare town planning application and have this lodged in a timely manner. If you wish to proceed with Palmyra you need to pay the invoice that has been tendered on Monday. If there are any other issues or financial constraints (Jamal you mentioned you may have to go overseas to get money) then unfortunately we would need to as per our agreement keep looking for another site for you. Palmyra needs the franchisee who receives that site to comply with our procedures and I cannot vary the processes that all of our other franchisees go through. Palmyra is a very popular site and other franchisees who are in the site selection phase have requested it so I am hoping you can sort this out asap on Monday. 320 Two things are to be noted about this email. First, the section about payment of 50% of the purchase price and $50% of the balance was highlighted. To that point Mr Jamal had been invoiced the establishment fee of $35,000 plus GST. The invoice sent on 18 September 2014 was for $120,000 plus GST. An invoice for the amount of $120,000 is consistent with Mr Khalid's evidence that there was to be a cap of $300,000 plus GST. Allowing for the establishment fee of $35,000, an invoice of $120,000 on the basis that it was '50% of the balance of your purchase price', put the total price at $275,000 which is consistent with the expected cost being at that level and there being an overall cap of $300,000. It is certainly inconsistent with a position whereby it had been agreed that the cap of $300,000 would no longer apply because the cost at Canning Highway would be much greater than the costs of the South Fremantle site of $280,000. 321 Second, the content of the email is inconsistent with any conversation occurring on 17 September 2014 in which Ms Ali herself said to Mr Khalid 'Make sure you do not commit to something you cannot afford'. Instead, Ms Ali attributes to Mr Cameron a different inquiry to make sure that Mr Khalid has the funds available. 322 After that there were discussions between Mr Cameron and Mr Khalid in which it was agreed that a reduced amount of $90,000 plus GST would be paid at that stage. 323 The process of seeking Council approval then proceeded. 324 On 13 February 2015, Geowash asked for payment of the balance of $30,000 plus GST still outstanding from the earlier invoice. The balance was paid on 19 February 2015. 325 By May 2015, Mr Khalid started to get worried because building had not started on the Palmyra site. On 14 May 2015, Western Care received an invoice for a leasing deposit of two months rent. Mr Khalid spoke to Mr Cameron about the invoice. He said that he thought all the payments to establish the business were included in the $300,000 amount. Mr Cameron said that the lease deposit had to be paid and it was nothing to do with Geowash because it went to the owner of the land. The rental deposit was paid on 22 May 2015. 326 On 29 May, 2015, Mr Cameron sent an email to Mr Khalid in the following terms: Thank you for your remittance of $25,446.66 to Acton Commercial Estate Agent, being 2 months' rental leasing deposit for proposed Geowash site at 343 Canning Highway Palmyra. To date we have received from you, Stage 1 payment for this site to the amount of $132,000. To fulfil your further obligations to the Geowash Franchisor, and to establish your business at the Palmyra site, estimated next stage financial commitments for you to complete include:- $38,170 Rental Bond Guarantee - payable when the lease is signed $40,000 Working capital - funds to be available from the date the lease is signed. $l65,000 Balance of site building costs - payable upon commencement of site build To ensure that the proposed site is retained for you to operate your Geowash franchise, can you please confirm your capacity to fulfil these requirements? 327 Then on 3 June 2015, Mr Cameron sent a further email to Mr Khalid in the following terms: Further to our conversation today and in reference to my email to you dated Friday the 29th May, 2015:- In that email it did not include all the additional costs for this site already explained to you and agreed to by you. As per these previous discussions the estimated budgeted cost to build your store is, subject to any variations:- $360,000 plus GST You have already paid the following amount to the project:- Geowash Pty Ltd $35,000.00 plus GST Geowash Pty Ltd $120,000.00 plus GST Total paid to Geowash Pty Ltd is $155,000.00 plus GST Therefore your balance owing to complete construction (subject to variations) is $205,000.00 plus GST Could you please confirm that a loan amount including provision for some working capital of $200,000.00 will enable you to proceed with this site? You have already paid to Acton Commercial Estate Agent, $25,446.66.00 being 2 months' rental leasing deposit. You still require a 3 month rental bond of $38,170.00 payable when the lease is signed And minimum $40,000.00 Working capital If bank provides funds of $200,000.00 you will require around $95,000.00 plus GST. Could you please confirm prior to us proceeding any further on this site that you are in a position to come up with the shortfall of around $95,000.00 plus GST (subject to variation) as described above after the bank's contribution, assuming your loan meets their loan parameters and is approved. 328 The reference to a balance owing 'to complete construction (subject to variations)' is significant. It continues the impression that the invoiced amounts are to cover set-up costs as actually incurred by Geowash. 329 Mr Khalid sent the following email in response: We have got the security bond as well as working capital to commence our business we also have the shortfall to the balance required. Whatever the required after the bank loan we have available including any variation from the bill price. We have available 95000 plus Gst plus any variation required to complete the site. 330 Mr Khalid says his email was sent in the following circumstances. He had spoken to Mr Cameron in telephone conversations and had expressed his concerns about the costs being more than the $300,000. Mr Cameron had said that the Palmyra site needed more money because there is no structure and the site has to be built from the ground up. Mr Khalid asked for his money back as it was getting too expensive. Mr Cameron said that Geowash could get him another cheaper site. Mr Cameron said that payment would have to be made for the Palmyra site or Mr Khalid would lose it. In that context, Mr Khalid said Mr Cameron dictated the email. He said he told Mr Cameron he did not have $95,000. He said that Mr Cameron told him the email would be used to get a bank loan and was just for the bank. 331 Mr Cameron says that the email was sent in the following circumstances. He said the June email was sent after Ms Ali told Mr Cameron he should articulate the costs of building the Palmyra site in detail to Mr Khalid. Mr Cameron says that after the June email, Mr Khalid asked for a payment plan. The $95,000 was agreed as the first part of the payment plan. 332 I do not accept the evidence that the June email was sent to provide full details of costs. There were no details provided in the email, just a higher figure. I find that despite the agreed cap, Geowash was seeking to charge a much higher amount. Mr Cameron was pressing Mr Khalid to accept the additional cost or forfeit the Palmyra site. The reference in Mr Khalid's email of 3 June 2015 to 'any variation required to complete the site' reflects the conversations with Mr Cameron at the time being about the need to pay more than the capped amount of $300,000. 333 The evidence as to dealings with ANZ bank is that it was Mr Khalid who provided that information and those dealings occurred in July and August 2015. In that context, I do not accept the explanation provided by Mr Khalid that his email was dictated by Mr Cameron. I consider it to be more likely in the sequence of events that Mr Khalid was pressed into accepting the variation on the agreed cap under threat of not being able to proceed with the Palmyra site. 334 After that, Geowash pressed for payment of the $95,000. At no time in response did Mr Khalid say that the amount had only been specified for the purposes of an application for a bank loan. This is a further reason for not accepting that evidence. 335 On 17 July 2015, Mr Cameron sent the following email to Mr Khalid: I tried to call you yesterday. We require your shortfall of $95,000 plus GST as a project payment today as outlined in my email below sent to you on last month on the 9th June. You haven't made payment of the invoice for bills sent to you on July 8th but we have still proceeded and engaged project manager to commence build as we have been advised the engineering certificate will be provided on Tuesday and need to engage contractors today and order materials. We cannot do so unless we receive your funds to do so. You are not in a position to draw down on your bank loan yet as you have not signed the lease yet and cannot do so until the commencement date is agreed to. This is irrelevant to you having to make your progress payment of $95,000 plus GST as you need this amount in addition to the bank funds to commence works. Geowash has been making payments on your behalf for additional reports required by council to facilitate the approval despite you not paying us for them when you were asked. This is because we are fully aware that the landlord wants rent to start. We are now in a position of requiring progress funds to keep going with this project. It's now time to make your payment as we cannot hold up the process of the Palmyra build. If there are any issues with you making the payment today or if you do not have access to funds for variations or you cannot or don't want to proceed with the Palmyra site today for any reason then please call me today, otherwise please let me know today when you have made the progress payment. I cannot help you delay past 5 pm Melbourne time today. 336 I find that this contemporaneous communication reflects the progress of the dealings between the parties at that time. 337 Thereafter, Geowash made formal demand for the payment of the $95,000. Mr Khalid appointed lawyers to act. By 22 July 2015, the position had moved to one where Mr Cameron wrote to those lawyers in the following terms: Just to reiterate the amounts paid to date and the amount on the tax invoice do not represent a full and final settlement amount for the store. Any variations in build are additional and you will notice the mention of possible variations in the correspondence. We do not sell fixed price sites nor absorb variations on behalf of franchisees. 338 The above communication was an inaccurate account of the dealings that had occurred between Mr Cameron and Ms Ali for Geowash on the one hand and Mr Khalid and Mr Mansoor for Western Care on the other hand. Those communications were on the basis that the amount to be paid would be capped at the amount of the budget that had been set by Mr Khalid and Mr Mansoor. It is a communication that reflects poorly on Mr Cameron's credit more generally. 339 There followed a period in which attempts were made to obtain finance from ANZ to enable the franchise agreement to proceed with additional funding. In that context Geowash stated that the overall cost would be $395,000 plus GST and provided a further invoice to reflect that position. 340 On 9 October 2015 Mr Khalid sent a long email to Ms Ali about his dispute with Geowash. He proposed that the parties have a detailed discussion. The factual account given in the email at a time when Mr Khalid was seeking to reach agreement to be able to proceed is consistent with the account he gave in these proceedings. In particular, it details his complaint that he was told the costs would be $300,000 but by that time (October 2015) the project would cost nearly $450,000. 341 It appears that neither that discussion proposed by Mr Khalid in his email nor the loan proceeded because a formal breach notice was sent on 15 October 2015. 342 Building by Geowash on the Palmyra site never commenced and no further funds were paid by Mr Khalid, Mr Mansoor or Western Care to Geowash. 343 Rent continued to be paid on the Palmyra site by Western Care until about March 2016. There was a dispute about the lease. Western Care resumed paying rent in May 2017 and has built a carwash business on the site trading as Impeccable Hand Carwash. 344 Mr Cameron says that he had conversations with Mr Khalid in November 2015 and August 2016 in which Mr Khalid said that he would stop telling franchisees what to say and would make the ACCC problem go away and made threats to go to the Melbourne franchise show and posted videos on YouTube and Facebook. I have dealt with Mr Khalid's oral evidence about these matters. I do not accept that Mr Khalid had been influencing the evidence of other Geowash franchisees. Other franchisees in Western Australia had valid concerns of their own to raise in relation to their dealings with Geowash. I do not accept the submission to the effect that I should find that there has been collusion between franchisees to give false evidence in these proceedings. 345 I accept the evidence of Mr Khalid that if he had known at the outset that the cost would be more than $300,000 then he would not have entered into the franchise agreement with Geowash. 346 Geowash did not deliver a site to Mr Khalid because it sought to obtain payments from Mr Khalid that substantially exceeded the cap that it had agreed. The monies received from Mr Khalid, Mr Mansoor and Western Care were applied, in accordance the usual practice of Geowash, to pay commissions and to meet the general operating costs of Geowash. Those matters may have contributed to the need for Geowash to seek further monies. What can be said on the evidence is that Geowash would not have had at its disposal all of the monies that had been paid to it for the Palmyra site.

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Rajiv Kalyan and Rhods Family Trust (Geowash East Perth) 347 Mr Kalyan was born in India and has lived in Australia since 2005 and in Perth since 2007. He obtained a Bachelor of Science degree in India. He studied hospitality management in Australia. He owns a property in High Wycombe that he bought with his friend Mr Jasvinder Singh. He lives in the property with his wife and daughter and Mr Singh. 348 Mr Kalyan and Mr Singh are the trustees of the Rhods Family Trust. Mr Kalyan was questioned about his knowledge of trust structures. Based on his answers I would not conclude that he had a sophisticated understanding of different business structures. In Australia, Mr Kalyan has worked as a cook, security guard and taxi driver. His involvement with a Geowash franchise was his first business. 349 In around March 2014, Mr Kalyan and Mr Singh started looking for a business to own and run. They intended to use their savings and a loan. They searched for opportunities on the internet and identified Magic Hand Carwash and Geowash. The Geowash website said that there were franchise opportunities for a maximum of $250,000 and could be less depending on the type of site. 350 Sometime later they made an inquiry to Geowash and Mr Kalyan received a phone call from Mr Barjesh Kalyan (Bajji). Mr Kalyan knew Mr Bajji Kalyan as they were from the same village in India. Next there was a meeting with Mr Bajji Kalyan and Mr Gujral who introduced themselves as the Geowash master franchisees in Western Australia. They all met at the South Fremantle Geowash outlet in mid-August 2014. At the meeting Mr Bajji Kalyan and Mr Gurjal said that a Geowash franchise costs about $200,000 just for the store and between $240,000 and $265,000 with a café. They said that the franchise agreement will state the cost as between $250,000 and $350,000 but it will be no more than $300,000. They said that there was a site in Palmyra on Canning Highway that was available. 351 This evidence provides further support for the account given by Mr Khalid (see the previous section of my reasons) to the effect that the price being mentioned for the Palmyra site at the time was $300,000. 352 A few days later Mr Kalyan received a call from Ms Ali. She proposed a meeting when she was next in Perth. 353 On 18 August 2014, Mr Kalyan paid a deposit of $5,000 for a Geowash franchise. 354 On 21 August 2014, a Disclosure Document and draft franchise agreement was sent to Mr Kalyan. On 2 September 2014, Mr Kalyan and Mr Singh met with Ms Ali, Mr Cameron and Mr Bajji Kalyan at the Intercontinental Perth Hotel. Ms Ali said the cost of setting up the franchise was generally between $250,000 and $350,000 depending on the size of the café. 355 After the meeting, Mr Kalyan exchanged emails with Ms Ali. He provided details of the Rhods Family Trust. He asked for the franchise agreement provision requiring quarterly profit and loss to be amended to annual. He asked for a period in the documents to be extended from 90 days to 120 days. He asked for the franchise to extend beyond 10 years to the length of the lease. These matters were confirmed as agreed by Ms Ali. 356 On 6 September 2014, Mr Kalyan was told by Mr Bajji Kalyan that the Palmyra site was no longer available. 357 On 8 September 2014, Ms Ali sent an email asking for the signing pages to be signed and returned. On the same date an invoice was sent for the 'Establishment Fees for Purchase of Franchise Site in Western Australia'. It was for $35,000 plus GST less the deposit paid of $5,000. 358 The execution pages were signed and returned. 359 Mr Kalyan did not have a detailed legal understanding of the franchise agreement. It was the other material that he received and the conversations that he had that provided him with his understanding of the arrangements. He did not rely upon the detailed terms of the franchise agreement concerning the cost of the franchise. 360 There were discussions about possible sites. On 24 March 2015, Ms Ali sent an email to Mr Kalyan saying that a site in Mandurah had been secured and attaching an offer to lease. An invoice was attached for $130,000 plus GST. The email said that matters had progressed to Stage 2. It then said: 1. Part-Payment of the Geowash Hand Car Wash Franchise. Please find attached Tax Invoice relating to the purchase of your Geowash Franchise Store. Your next step is to attend to the payment of the attached Tax Invoice. Our staff and management team then commences / continues the management process of discussions with Planning Officers, Engineers, Senior Draftsman, Council, Builders, Solicitors etc. Please note, once you have paid the attached invoice, our town planners and engineers will be undertaking the following tasks to prepare and submit the Development Application and negotiate its approval and we personally will be overseeing and managing the process: - Task 1 - Due Diligence • Review planning requirements of the City of Mandurah; • Review relevant Local Planning Policies; • Undertake site visit to survey existing development on the subject land and surrounding sites. • Provide Building Designer with a short summary of relevant findings. Task 2 - Organisation and Coordination of Co-Consultant Inputs • Brief, request quotations, review and provide recommendation on the engagement of Technical Specialists (if required). • Confer with and review outputs of Technical Specialists. Task 3 - Preparation of Draft Development Application • Review and provide input to prepare Development Plans. • Prepare draft Development Application and consulting with the council • Oversee Land Owner Authorisation of the application Task 4 - Formal Lodgement of Development Application with Council • Refine DA to reflect any feedback received. • Prepare final DA and covering letter, print and arrange formal lodgement with the City. Task 5 - Post Lodgement: Monitoring and Reporting. • Monitor Council processing, assessment and officer reporting on DA. • Attend follow up meetings as required with City of Mandurah to negotiate acceptable outcome. • Progress reporting to the City of Mandurah. Once you have completed the first step of this stage, we will then proceed to step 2 of formally securing the site for you. 361 No estimate of costs was provided with the invoice. It was sent as soon as there was a lease proposal. No documents have been produced by Ms Ali to support any costing in relation to the site. The email sets out very generalised information about the steps to be taken of a kind that was provided to other franchisees at the same stage of their dealings with Geowash. The email is presented in a way that indicates that there will be engagement of external parties to undertake much of the work required. Notably, the email refers to town planners and engineers undertaking tasks to submit applications for development approval. 362 The invoice was paid on 31 March 2015 on behalf of the Rhods Family Trust. 363 After that, Mr Kalyan became frustrated with delays in finding a suitable site and complained to Ms Ali. On 10 July 2015 a site in East Perth was suggested by Ms Ali. Around a week later Mr Kalyan and Mr Singh met with Ms Ali and Mr Cameron and another person introduced as Geowash's architect at the East Perth site. Mr Kalyan expressed his frustration about the delays. Ms Ali said that the site could be pulled together in four to six weeks. He asked about cost. Ms Ali said that the cost would be $250,000 to $275,000 plus GST including the café, but $75,000 less if they did not want a café. 364 Mr Cameron disputes that such a conversation took place. He does not provide any evidence as to a recollection of what occurred. Having regard to my findings rejecting the evidence of Mr Cameron about a number of conversations with franchisees I prefer the evidence of Mr Kalyan. 365 In late August 2015 Mr Kalyan had a telephone conversation with Ms Ali in which she said that she would be sending an invoice for the second stage payment of $176,000. He asked why the invoice would be for so much when she had said that the business would cost between $250,000 and $275,000 plus GST including the café. Ms Ali explained that the additional amount was because certain costs were not going to be covered by the owner of the premises but the owner had agreed to give a further three months rent free period which was about the same as the difference. On that basis Mr Kalyan agreed to pay the extra. The invoice came on 2 November 2015 and it was paid on 6 January 2016. 366 Mr Kalyan says that there were a number of aspects of the building works that were unsatisfactory and there were delays. As a result, by the time the business finally opened, the agreed six months rent free period had expired. Also the Rhods Family Trust has had to incur significant additional expenditure to complete the fit-out of the site. 367 When an administrator was appointed to Geowash, Mr Kalyan was approached by the Subiaco Geowash franchisee to consider operating as Impeccable Hand Carwash. Steps were taken to 'de-brand'. From around the end of November 2016, the business at the East Perth site commenced as Impeccable Hand Carwash. 368 Mr Kalyan says that the costs that he paid for the establishment of the Geowash franchise were more than he was told and the fit-out was never finished. He was not provided with a breakdown of actual costs incurred by Geowash in establishing his franchise.

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Rajiv Kumar and Shri Ganpate Namah Pty Ltd (Geowash Baldivis) 369 Mr Rajiv Kumar (also known as Mr Romy Devgan) was born in India. He completed a Bachelor in Computer Applications. He came to Australia on a student visa and completed certificates in cooking and business management at a private college so that he could apply for residency. He was asked some questions about his understanding of corporate structures in cross-examination. I find that Mr Kumar did not have a detailed understanding of companies or accounting and had not been in business before he approached Geowash about a franchise. 370 In Australia, Mr Kumar worked in restaurants and as a store person. He was interested in establishing his own business. He thought he could afford between about $200,000 and $250,000. He had savings of $80,000 and planned to borrow the rest. 371 In November 2013, Mr Kumar saw an advertisement for Geowash. He made contact. He received an email response from Geowash. It referred to prime exclusive territories being available 'from $149,500 plus GST (inclusive of negotiated lease, shop fit out, all equipment fixtures and fittings. establishment of business with the set up and initial ongoing customers)'. It attached the Franchise Overview and Your Next Steps documents. The Franchise Overview described 'Geowash Hand Car Wash Set-up Costs' as ranging from $89,000 for a multi-level car park to $250,000 for carwash and café. 372 Mr Kumar then spoke to Mr Gujral on the telephone. Mr Kumar said he was in Baldivis and Mr Gujral said that Geowash had a site there for a franchise. Mr Kumar asked about cost. Mr Gujral told him that the starting price would be $149,500 plus GST, but a store with a café would be a maximum of $250,000 plus GST. Mr Kumar asked whether everything was included in the $250,000 and Mr Gujral confirmed that everything was included. He said that it would take three to six months to get the franchise started because Geowash had good relationships with councils. 373 Mr Kumar resumed contact with Mr Gujral in July 2014. He completed an application form. The form provided for business references to be provided but that was left blank. In response to the question 'Have you ever operated your own business?' Mr Kumar answered 'No'. In response to the question 'Do you understand Franchising and Licensing Services?' he answered 'Yes'. As to previous work experience he stated 'Team leader'. He said that he had 'cash and loan' to invest in the business. As to other relevant qualifications he said he was 'hardworking, honest'. As to applying these qualifications to the Geowash franchise he said 'To start any business and for its success a person needs to be hardworking and honest towards it'. In response, Mr Kumar was sent an invoice for a 'Deposit (Fully Refundable 14 days)' of $5,000. 374 Mr Kumar and his wife met Ms Ali and Mr Gujral's associate Mr Barjesh Kalyan at the South Fremantle (Beaconsfield) Geowash store opening. Mr Kumar could not remember the date of the opening, but other witnesses place this as being held on 15 August 2014. Ms Ali told Mr Kumar and his wife that a business like the South Fremantle store would cost between $250,000 and $300,000 plus GST and it took three months to build. Mr Kumar said he could afford a maximum of $275,000. He referred to the advertising material saying $250,000 plus GST and said he could not afford any more than that. 375 After that, Mr Kumar and his wife decided to proceed. They had not paid the earlier invoice for the deposit and they were sent a new invoice dated 17 October 2014 which he paid. 376 On 11 November 2014, Ms Ali sent an email to Mr Kumar attaching a Disclosure Document. Mr Kumar arranged to incorporate Shri Ganpate Namah Pty Ltd on 25 November 2014. 377 On 27 November 2014, Ms Ali sent an email to Mr Kumar about signing the franchise agreement and referring to hard copies having been sent by mail. 378 On 5 December 2014, Mr Kumar sent an email to Ms Ali in the following terms: I have few questions to clarify before signing the agreement. Would you be able to provide me roughly idea regarding how much would be the total cost altogether and what would be included in it. I have read the agreement and I want to know about how much we have to pay now and what would be included in that because it mention in the agreement about establishment fees, training cost, licence fees, documentation fee and so on. Is everything included in the money that we have to pay after we sign the agreement i.e $33,500 or all these are to be separately pay out? 379 Mr Cameron responded the next day with the following: As discussed you don't get separate invoice for training fee as it is packaged in total price of setup. You would already have received the documentation fee invoice from the solicitor and this is paid directly to them after you sign the hard copy of the agreement next week (you have already signed the signature pages and emailed us the copy of the pages you signed of the agreement you received by email). We cannot pay the documentation fee as it is the legal cost or documentation fee for the solicitor preparing the agreement and we cannot pay your legal fee. Also, as discussed, there are many variables into the price that is paid for a Geowash store that won't become evident until a site is selected and plans and permits are approved and obtained. At this point we can obtain a quote from the builder or builders who will tender for the works. The estimated price will then be provided but will still be subject to the level of fit out of the Cafe', as you have seen at our stores there is a variance in Cafe' finish selected and therefore a different price costed for those stores. As discussed we will have more of an idea once sites are selected and we know more about council requirements etc. Obviously if you select a site of say 1500 square meters and council requires the whole area to be paved then your cost will be more than if the site is already concreted. its was easier for you to get an estimate for the cafe you went into partnership with because you knew the site and a cafe is different to quoting for a site the details and size of which at this stage are not known. You are also not forced to chooses any site shown to you. I confirm that you will be paying your establishment fee by Monday. I look forward to seeing you next week and in the meantime please call me if you have any further questions. 380 Mr Cameron's email was copied to Ms Ali, Mr Barjesh Kalyan and Mr Gujral. 381 The response from Mr Cameron is a significant document in a number of respects. First, there is no suggestion that the arrangement was for an agreed price. Second, Mr Cameron is describing a process of a kind provided for in the franchise agreement, namely the amount to be paid will depend upon the actual cost of the fit-out. Third, there is no suggestion that there will be charges for time spent by Geowash personnel in respect of the costs of constructing the outlet. The email refers to obtaining quotes from a builder as part of a tender and final cost depending upon the level of finishes. 382 Other franchisees have given evidence that the arrangements that they made were to similar effect, namely the amounts to be paid to Geowash after the establishment fee were for the costs of arranging the fit-out. Those franchisees referred to oral communications with Ms Ali and Mr Cameron at about the same time. The email from Mr Cameron in response to the general inquiry from Mr Kumar about how costs would be charged under the franchise agreement for the establishment of the franchise site provides substantial support from a contemporaneous document authored by Mr Cameron for the version of events given by each of the franchisees. It is completely contrary to the case advanced by Ms Ali and Mr Cameron that franchisees agreed a price payable in two instalments. 383 Also on 6 December 2014 (prior to the email), Mr Kumar received a telephone call from Mr Cameron who introduced himself as being from Geowash. They spoke about how long it would take to build the site. Mr Cameron said it would take up to one year. Mr Kumar raised a concern about the period of time for the cost. Mr Cameron said that the price would depend on the site and whether the site had to be paved and how much was spent on the café. Part of the franchise establishment fee was paid to Mr Barjji Kalyan one of the master franchisees in Western Australia. 384 In December 2014 there were meetings about the proposed site in Baldivis. Ms Ali raised the possibility of a site in Rockingham instead of Baldivis. Mr Kumar said he only wanted a site in Baldivis. 385 Ms Ali sent an email to Mr Kumar on 8 January saying that they were chasing up answers on the Baldivis site regularly and that things move slowly in January. 386 On 28 January 2015, Mr Kumar raised concerns about the proposed lease cost for the site in Baldivis. 387 Mr Kumar spoke to Ms Ali at about this time. She said that to progress to the next step a payment of $143,000 was required. Mr Kumar said that he needed figures for the business and plans for the site. He said that he did not want to spend any money if he did not have a plan. Ms Ali then said that she would send through 'the spreadsheet for Osborne Park'. 388 On 31 March 2015, Mr Kumar received an email from Ms Ali stating that Geowash had negotiated and finalised the terms of a lease of the Baldivis site and attached an offer to lease. An invoice was attached for $130,000 plus GST for 'Stage Payment for Purchase of Franchise Site in Western Australia'. 389 Mr Kumar telephoned Ms Ali and raised a concern that he would be paying around $180,000 to Geowash and be waiting for six months or more for the business. He asked for a written confirmation of the total cost. He said he was concerned about sticking to his budget of $250,000. Ms Ali said it would be three to six months to handover. 390 Ms Ali sent two further emails to Mr Kumar on 31 March 2015. The first was as follows: Further to our discussions, you will be paying this invoice as follows:- Payment No 1 - $88,000 paying now. Payment No 2 - $26,400 paying on 14.4.2015 Payment No 3 - $28,600 must be paid by 30.6.2015. Please note, this invoice must close in the 2014/15 financial year. Should you have any questions relating to this, please feel free to contact me. 391 A few hours later, the following further email was sent by Ms Ali to Mr Kumar: Further to our chat this evening. Re costings - there are many variables into the price that is paid for a Geowash store that won't become evident until a site plans and permits are approved and obtained. It is at that point we obtain a quote from the builder or builders who will tender for the works. The estimated price will then be provided but will still be subject to the level of fit out of the Cafe', as you have seen at our stores there is a variance in Cafe' finish selected and therefore a different price costed for those stores. We expect for a basic cafe fit-out to pencil in the figure range of $250k to $270k plus GST (allow for minor variations) (eg South Fremantle Cafe), assuming there are no other requirements apart from our standard Geowash car wash cafe set up. We expect for an upgraded cafe fit-out to pencil in the figure range of $285k to $295k plus GST (allow for minor variations) (eg Osborne Park Cafe), assuming there are no other requirements apart from our standard Geowash car wash cafe set up. Should you have any questions in relation to this, please do not hesitate to ask. 392 Again, the process described in the second email is significant in the context of the present proceedings. Ms Ali does not state that a purchase price had been agreed and the instalments were based upon the agreed amounts. The impression created by the content of the email is that Geowash would be incurring external costs to fit-out the site. The email refers to a site plan and permits and a quote from builders which will enable an estimated price to be provided subject to the level of fit-out of the café. Specific figures are provided 'to pencil in the figure range' identified. These statements suggest that there will be an itemisation of all the costs and that is what will be charged to Mr Kumar based upon what is actually incurred. There is no indication that Geowash would itself be charging a fee for administering or managing this process over and above the establishment fee or that money received by Geowash would be used to pay commissions. 393 Mr Kumar responded to the email as follows: I have couple of things to clarify. First of all regarding our discussion on the phone yesterday we decides to pay second instalment in May but the email you sent me yesterday it states that the instalment is in April. Also our budget is only $2,50,000 - $2,70,000 not more than that and will you let us know what is included in the basic carwash. There is a clause in lease agreement that the lease is for 10 years so what would be next step after ten years. Lastly, we would like to pay final payment at handover time and its been more than six months for us to sign the franchisee agreement and we still have waiting period of 6 months or so. I would be great if we get everything ready as soon as possible as I have to pay now $1,43,000 and its not worth for me to wait that long. I have enquire from other franchise business and no one required that huge amount beforehand. 394 Ms Ali responded: I agreed on the following:- Payment No 1 - $88,000 paying now Payment No 2 - $26,400 paying on 14.4.2015 (Two weeks from now) Payment No 3 - $28,600 must be paid by 30.6.2015. Please note, this invoice must close in the 2014/15 financial year. This is the best deal I can offer you. I have been very flexible here and accommodated to your request. Please stick with the above payment arrangement and let me know once you have made the payment. 395 Mr Kumar persisted in a response on 1 April 2015 in which he said that the email 'didn't clarify me my concerns that I asked you in the previous email. Email as well please give us roughly handover date'. 396 On 2 April 2015, Mr Kumar sent a further email in which he raised further concerns about paying a large amount when there was no certainty about an approval from the council. It said: I am still not convinced regarding the payment method because I am worried about the approval from council as it could be either way from them so I don't see any point of paying that huge amount of money when I am not sure about getting the approval or not and how much time they will take. I am not in any profitable condition when I know I have to wait 6 months or so even after paying that amount. And in the previous email I did ask you about when to make final payment and the roughly when I will get the handover but still nothing get back from you regarding this. I have to organise so many things to open this business so I would like to get information about all the different stages and how it works. 397 Ms Ali responded the same day with the following: Further to our conversation, please find attached Franchisee FAQs. Please refer to page 6 of the document "How long does it take to open my store"? Generally a council DA application takes up from 60 days. Your last payment will be due once we have received the council approval / just before we commence construction. Generally construction period is between around 8 weeks. This is the standard Geowash system with every franchisee. Our aim is to open your store as soon as practically possible, but there are certain factors which are not within our control and we work as hard as we can to ensure we open your store as soon as practically possible. This should answer all your questions I hope. Should you have any further questions, please do not hesitate to ask. 398 The 'last payment' referred to was to coincide with the commencement of construction. There is no suggestion that the payments are part of an agreed purchase amount. The email exchanges are making clear that the amount to be paid is determined by the actual cost of approvals, design, building and fit-out. The amounts being charged are referrable to cost. 399 All these emails provide substantial support for the evidence given by other franchisees as to their communications with Geowash at about the same time being to the effect that the payments sought by Geowash were to cover costs of setting up the Geowash site, not instalments of an agreed price that Geowash could then expend how it saw fit (including on paying commissions). 400 On 7 April 2015 Ms Ali sent an email to Mr Kumar saying that she would be in Perth the next week and upon payment of the instalment, Geowash would 'engage our architect to commence works on the Geowash Baldivis site and will be in a position to organise the necessary requirements re Baldivis in our trip along with the architect next week'. 401 The content of the email is in stark contrast to the evidence of Ms Ali (which I do not accept) to the effect that she had a conversation with Mr Kumar on 2 April 2015 in which she said she could not give a handover date because she could not predict how long the approval process would take. I find that the evidence of Ms Ali was false and self-serving and is an example of many respects in which her evidence was unsatisfactory (see below). 402 On 13 April 2015 Ms Ali sent to Mr Kumar a sketch of a single page site concept for the layout of the Baldivis site. A more detailed plan was sent on 22 April 2015. It was prepared by Bate Design Strategies of Collingwood, Victoria. 403 In July 2015, Mr Kumar arranged to pay a deposit of $5,000 in respect of preparation of an agreement for lease of the Baldivis site. 404 On 14 August 2015, Ms Ali referred Mr Kumar to Mr Shekher Aryaa as a person who was 'assisting our franchisees with their bank loans'. The email was copied to Mr Cameron. This conduct supports the evidence given by other franchisees about Geowash providing assistance to obtain finance. It confirms an awareness on the part of Ms Ali and Mr Cameron that Mr Kumar was borrowing funds for his Geowash franchise business. 405 On 21 October 2018, Mr Kumar and his wife met with Ms Ali at the Pan Pacific Hotel. Ms Ali told them that they could not have the Baldivis site because the council was not approving the plans. Ms Ali proposed that they look at the Rockingham site. In emails at this time Mr Kumar was raising complaints about the delays and how long Geowash had held his money. 406 Issues arose as to why the Baldivis site could not proceed and there was some consideration of an adjacent Baldivis site. 407 On 3 December 2015, Ms Ali sent the following email to Mr Kumar about a site in Rockingham: Geowash Rockingham Purchase Price As I explained to you over the phone, I can't build Rockingham for the same price as Baldivis. Baldivis had civil works covered by the landlord and this is not the case for Rockingham. Geowash is responsible for all the civil works. Please note, the indication of Rockingham investment is $350,000 plus GST (plus if there is any variation due to any building permit requirements or as a result of any builders variations requested). This suits your timing particularly because this store is ready to commence construction. I have got parties that want this store too, however, I would rather have you who has signed up with Geowash sometime ago and gone through the unfortunate Baldivis experience be given this site and not a fresh franchisee who recently has signed up with the brand. RE Geowash Baldivis As a sign of goodwill, although I am totally not at fault here and have done everything right by you throughout the exercise to help you secure the Geowash Baldivis Store, if you proceed with the Geowash Rockingham Store, I will absorb losses borne incurred with all the investment that has gone into securing the site and management and lodgement of the DA for Baldivis. I can only do this for the Rockingham store as I have already expended all the costs of getting the store designed and permitted. The offer will not be offered on any other site you or we may find in the future. Please come back to me as soon as possible confirming your acceptance of the above and I will make this happen for you and have your store commence building. 408 After that Mr Kumar sought legal advice and on 15 December 2015 a lawyer acting for Shri Ganpate Namah and for him personally sent a letter saying that unless Geowash would resume assisting Mr Kumar to obtain the site at Baldivis, then Shri Ganpate Namah wished to terminate and would seek a full refund. Lawyers acting for Geowash responded in the following terms: On the substantive issues you have raised in your email, I have been instructed to advise that my client denies each of the allegations raised by your client, and furthermore, a refund is unavailable and will not be paid. Your client remains bound to its obligations under the franchise agreement that it signed. 409 Shri Ganpate Namah paid a total amount of $181,500 to Geowash. No Geowash site was established and no refund of any monies was provided. 410 On the evidence, steps were taken by Geowash to secure development approval for the Baldivis site but those steps were unsuccessful. The failure to deliver the Baldivis site is explained by the unwillingness of the landlord to proceed to reach an agreement. The franchise agreement contemplated that the parties would seek to identify another site in such an event. The case for the ACCC makes no allegation that concerns whether that aspect of the agreement was performed. 411 In cross-examination Mr Kumar agreed that his understanding of what Geowash was to do was based on the plain English documents that he received rather than the technical documents (being a reference to the franchise agreement and Disclosure Document). However, that statement does not assist Ms Ali or Mr Cameron. As I have noted, the emails exchanged with Mr Kumar both before and after Shri Ganpate Namah and he entered into the franchise agreement are not consistent with the case advanced by Ms Ali and Mr Cameron. 412 Mr Kumar was also asked about the contents of an email that he sent to the administrator of Geowash on 31 October 2016. It was copied to Ms Ali and Mr Cameron. It was also copied to Mr Cromwell of the ACCC. The content of the email closely resembles an email sent by Mr Rajvinder Singh to the administrator two days earlier. The content of one must have been prepared with access to the content of the other. The similarity in wording could not have arisen unless that was so. 413 In response to questions from counsel for Ms Ali and Mr Cameron, Mr Kumar said that he did not discuss the email that he might send to the administrator with anyone before he sent it. Further, he said that he did not share a pro forma or template of the words that he would use. These questions were directed to what occurred in relation to Mr Kumar's email. Mr Kumar was not asked whether he received a copy of Mr Singh's email to the administrator before he prepared his email. The matter was not taken any further in cross-examination. It was not put to Mr Kumar that there had been collusion in relation to the content of the email or that it was inaccurate or that any of his evidence should not be accepted because of any matters of that kind. 414 In re-examination, Mr Kumar said that the email had been prepared by him and his wife. He said that he did not have a memory as to how it was prepared. He did not know whether he had kept a copy. He could not say why the emails were similar. 415 Mr Singh was also asked about the emails. He was asked whether he discussed his email with anyone. He said that he did not remember. 416 Given that both emails were addressed to the administrator and both were copied to each of Ms Ali and Mr Cameron there was no clandestine aspect to the preparation of the documents. The email that was prepared by reference to the other must have been prepared with the knowledge that both documents would end up with the same recipients. 417 The content of the emails is not of a character that would give rise to any concern about collusion in relation to the matters the subject of the testimony given by Mr Kumar and Mr Singh. Mr Singh's email says: I would like to know why I have not been informed of what is happening with the company, as far as I am concerned my franchisee agreement has not been terminated and I have never been informed of where all of my funds have gone. Sanam, Charles and Garry if you have been hiding some information from the Administrator please provide him my details. My site has been taken of the Geowash website, just before you had to appoint the Administrator, and my email I.D has been terminated without any notice "again just before the appointment of administrator". I demand that you provide me some legal document which allows you to keep me out of this critical information, meetings. considering when my agreement has not been terminated, where the directors are fully aware of why my site is closed for business. Dear Sam since you may not have been made aware of myself by the directors, and if you are aware of me than please explain why have I not been contacted or informed of the company being under Administration, also if you can with provide me "Proof of Debt" Form so I can lodge my claim, or please direct me where can I get the form and any other formalities to go with that. Sam I am supplying you the above information, when you are auditing the financial reports you shall find the transactions relating to myself "Rajvinder Singh" and Company Name "Keeran Pty Ltd". Sam please inform me if I need to approach you through any other channels, or if there is any set procedure to contact the Administrator. I shall be very thankful of your response, hope to hear from you soon. 418 I find that neither the content of the emails nor the evidence given in relation to them provide a basis for me to question the evidence given by Mr Kumar or Mr Singh about their dealings with Ms Ali, Mr Cameron and others in 2014 and 2015. Further, their accounts are substantially supported by contemporaneous documents for reasons I have given.

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Prabhjot Bhaur and Panjab Pty Ltd (Wanneroo) 419 Mr Bhaur came to Australia in 2007 after finishing high school. He completed a diploma in printing and graphic design in Melbourne. Since the dispute with Geowash he has obtained a diploma in real estate from the Real Estate Institute of Western Australia. 420 In mid- 2014 he and his brother, his cousin and a friend began looking for a business. They refer to each other as business partners. None of them had any business experience before their involvement with Geowash. They were introduced to the idea of a Geowash carwash through speaking to Mr Sukhdeep Singh who had started the South Fremantle Geowash outlet. They had a budget of $250,000 to $270,000 plus GST. The amount of their budget was communicated to Geowash in August 2014. Their initial dealings were with Mr Gujral and Mr Barjesh Kalyan who described themselves as the Geowash master franchisees for Western Australia. 421 The four of them decided to proceed to consider a Geowash franchise. Panjab Pty Ltd was registered on 9 September 2014. They all became directors. They paid a deposit of $5,000. 422 On 15 September 2014 Ms Ali sent the Disclosure Document to Mr Bhaur. The covering email referred to the documentation being sent by mail. 423 On 29 September 2014, Geowash sent an invoice to Mr Bhaur's brother for $33,500 being the balance of the establishment fee 'for Purchase of Franchise Site in Western Australia'. The invoice was paid. In early October 2014, they expressed interest in a site in Wanneroo. 424 Late in October they received a communication from Geowash that indicated a cost of $300,000 for the franchise. Mr Bhaur's brother sent an email to Mr Gujral on 9 November 2014 in which he said 'The amount of franchise mentioned to us initially was $270,000, but in the email sent to [their fourth business partner], it says $300,000'. He asked for anyone at Geowash to address his query. On 9 November 2014, Mr Gujral responded: Regarding the investment level of $270k, correct me if I am wrong but we informed that the Geowash(sanam) has increased the budget which Sukhdeep bhajji paid for Fremantle which was $250k to at least $270k but it will depend on site for how much every site will cost to build and Sukhdeep bhajji said we should get looked after as this is already a second store from the existing franchisee and I told regarding the investment on any site Sanam does all the costing and if she can offer you at $250k or $100k I have no problem with that but costing is done by Sanam. It doesn't mean we can't offer you site at $270k, we can but looking at waneroo site specifically it's only a ground lease so it costs money to get the ground level and concrete the floor and build the structure and all the equipment and caffe in so would cost more money but there can be other sites which will cost $260k or a little bit less depending how much owner is ready to contribute in order to get his site leased for a long period. I will be at work tomorrow morning at osborne park, you are welcome to come and visit the site and also the quality of the equipments and the cafe built with signage and not to mention amount to money to which is required to get the approvals and the designers and the engineers etc, we get all the costing out at very early stage to keep you posted. Sanam was in Perth this week and is back in Perth not next week but the week after you can discuss this with Sanam as well. 425 There was no suggestion that the amount to be paid after the establishment fee included payment of monies other than the amount of the cost to set up and fit-out the site. In particular, the content of the email would be inconsistent with Geowash being able to apply monies received by way of instalment for costs in a way that allowed Geowash to retain monies irrespective of whether there was any associated cost. Put another way, the email contemplates charges by reference to actual costs, not by reference to a lump sum amount with Geowash being able to retain any surplus for distribution to Ms Ali or Mr Cameron by way of commissions or otherwise. 426 After receiving the email from Mr Gujral, Mr Bhaur sent an email to Mr Gujral on 10 November in which he said: Since we started the process, we have been under the impression that the investment will be between $250k to $270k max. It will be good if we can talk further on this. 427 On 19 November 2014, there was a meeting attended by Mr Bhaur's brother and cousin, Ms Ali and Mr Gujral. Mr Bhaur was in India at the time of the meeting. 428 On 25 November 2014, Ms Ali sent an email to each of Mr Bhaur and his brother in which she said that Geowash had received an offer to lease the site in Wanneroo and attached the offer. The email said 'You have now progressed to the next stage of your purchase of Geowash Hand Car Wash Franchise (Stage 2)'. It then summarised the next stage under the heading 'Part-Payment of the Geowash Hand Car Wash Franchise' in the following terms: Please find attached Tax Invoice relating to the purchase of your Geowash Franchise. As explained to you in our meeting last week at Crown Metropol, please attend to the payment as your next step. Once you have made the payment, we then want you to sign the offer to lease and return it back to us for execution. Our staff and management team then commences / continues the management process of discussions with Planning Officers, Engineers, Senior Design Draftsman, Council, Builders, Leasing Agents, Solicitors etc. 429 There followed a list of steps to be completed, expressed in generic terms. I have already quoted such lists from communications with other franchisees. 430 The enclosed tax invoice was for $143,000 (including GST). 431 Mr Bhaur was shocked by the amount of the invoice. Mr Bhaur's brother sent an email to Ms Ali dated 26 November 2014 in which he asked a number of questions, namely: 1. Regarding the invoice from Geo wash of amount $143,000. What percentage of total amount reflects that amount? 2. Does that invoice include the initial payment of $38,500 made earlier? 3. What is the total final figure of the purchase of our Franchise licence? 4. What will be our next payment time frames and amounts? (for example, the next instances when we will be required to pay). If you can answer these points above, it will be easy for us to organize the rest of the payments in time. 432 Ms Ali responded to each of these questions in an email response copied to all four of the business partners. The terms of the email are revealing in the context of the way Ms Ali and Mr Cameron put their case in the present proceedings. 433 As to question one, Ms Ali said: As discussed in Perth we estimate your site will cost around $295,000 plus GST. However, this will be determined once we tender the job to builders which requires engineering drawing to be complete. The figure will also vary as we have a detailed specs of what a coffee looks like now and equipment schedules, but a franchisee can also elect to upgrade various features of their store at their cost. For example if you wanted an 80 inch TV instead of a 65 inch for your cafe' then the difference in prices will be at your cost and add to your set up fee. 434 As to question two: The amount of $38,500.00 is for your franchise establishment fee. It is included in the $295,000.00 plus GST. 435 As to question three: See answer 1 above. 436 As to question four: Once this invoice is paid there are no further amounts payable until we have gone through council permit and change of use procedures, obtained a building permit and are appointing the builder to commence the building process. It is at that stage that you pay the balance of the cost of building your store. We estimate 30 days to design the plans and lodge with council, 60 - 90 days to obtain the permit, and a further 2 to 3 weeks to get the building permit. This of course depends on us being able to submit the application before the council close for the Christmas and New year break. So therefore, the next payment won't be due for around 120 days unless we receive the council approval sooner than the usual timeframe which is very highly unlikely. Please advise when me you've paid the invoice as I am keen to engage the architect to commence his works to try to adhere to the guidelines required so that we may lodge the application in time. As explained to you earlier, lets act in a quick smart manner here to ensure we beat the Christmas period. 437 The following aspects are to be noted. First the reference to the estimate of cost and the amount depending upon the detailed specifications for the café. This is a response in similar terms to that provided to like inquiries made by Mr Kumar. Second, the estimate is of an all up amount (including the establishment fee). Third, there will be a further instalment payable when building is to commence. Again this represents a process whereby the four business partners are being charged for the cost of approvals and building the franchise outlet. There is no suggestion that the amount being charged has a margin or profit to Geowash over and above the actual cost being incurred or that Geowash will charge for the time spent by its own personnel or will use the money to pay commissions. 438 Then there were further emails with Ms Ali in which concerns were raised about the amount of the invoice. 439 Ms Ali said that Geowash would not be progressing with the Wanneroo site if payment was not made. Mr Bhaur sent an email on 1 December 2014 in which he referred to earlier conversations in which the franchise fee was stated by Mr Gujral to be $270,000. He then said that they would definitely be attending to payment of the invoice. 440 Ms Ali responded with an email which included the following: Please note, any discussions that have taken place between yourselves and my representatives in WA have referred to prices from $270,000 but we can advise you that Waneroo will exceed this. Geowash Head Office is the only authorised party who assesses the total cost of any particular project when it is scoped out. If you have any questions about the final costings, I am your franchisor and only I am the authorised person to discuss this aspect with. … … Franchising is a process, a sequence of steps and we appreciate your respect for our time here and that of my team that work on siting, lease negotiation, town planning and designing, drawings preparation and management, council application preparation and lodgement, liaise with builder re building fit-out, input management in preliminary stage of the lodgement, a complete set of steps that are required to build your store. 441 Further emails followed. In an email from Ms Ali of 2 December 2014 she said: Looks like we agree to disagree and I can rely on my meeting and the consensus reached with your partners at my meeting to determine that your partners were fully understanding what the stages were and that, once our efforts secured an offer, that an invoice would be issued for 50% of the estimated balance to build Wanneroo. 442 I note the reference to the invoice being for 50% of the balance to build Wanneroo. 443 The four partners agreed to pay $50,000 to secure the Wanneroo site and a meeting was arranged for 9 December 2014. The amount of $50,000 was paid on 3 December 2014. 444 The meeting was held on 10 December 2014 at the Osbourne Park Geowash site. In attendance were Mr Bhaur, his brother and their friend the fourth business partner, as well as Ms Ali, Mr Cameron and an architect. They discussed the fit-out of the site and timeframes. Ms Ali said that the site would be completed within six to eight weeks. This is consistent with time frames that Ms Ali communicated to other franchisees. In his evidence Mr Cameron said that he did not witness such discussions but he did not say what was discussed. I do not accept the evidence of Mr Cameron. 445 Payment of a further $93,000 was made to Geowash in December 2014 and January 2015. There was little progress on the Wanneroo site until July 2015. Ms Ali provided assurances that all was being done to progress matters. 446 In October 2015, a draft lease for the Wanneroo site was provided together with an invoice for rent in advance and a security bond totalling about $40,000. 447 Initial council approval was received on 19 October 2015. 448 On 2 November 2015, an invoice for the next stage was received from Geowash for $143,000 including GST. An amount of $100,000 was paid. Panjab arranged a business loan. 449 On 12 February 2016, Mr Bhaur, his brother and their friend met with Ms Ali, a Mr Duncan and the builder for the Wanneroo site. Ms Ali said construction would start by 17 February 2016 and would be finished in six to eight weeks. She said that there would be minor variations in cost. They were not specified. 450 In May 2016 Ms Ali pressed for payment of the outstanding balance of the invoice of 2 November 2015. It was paid. The next day Ms Ali sent a further invoice for civil works of $54,052.90 including GST. This came as a shock to Mr Bhaur as he believed at the time that costs of that kind would have been covered by the amounts already paid. 451 Panjab had exhausted its loan funds and needed to borrow more to pay the additional amount. Ms Ali referred them to Mr Aryaa who assisted with a loan application to ANZ. It was declined. Mr Bhaur and his brother obtained personal loans at an interest rate of 16% to cover their further contribution. 452 A further invoice for civil work variations of $31,947 was received on 28 September 2016. The additional invoices were paid at the end of September 2016. 453 At that time the buildings had been construed but there was nothing inside and the ground on the site was still sand. 454 The business commenced at the very end of 2016. However, there was still some work to be completed. 455 The total amount paid to Geowash to establish the business was just over $416,000. 456 The significance of the dealings between Geowash and Panjab as to the cost overrun in the context of the present proceedings is that they show that Ms Ali dealt with Panjab and the four business partners on the basis that there could be further charges based upon Geowash's claims that there had been additional costs. There was no suggestion that there were two instalments to be paid as a purchase price. Rather, Ms Ali pressed for further payments on the basis that there were further costs. 457 I express no view at this point as to whether there were costs actually incurred by Geowash that were of the order charged to Panjab. To the extent necessary having regard to the claims advanced by the ACCC, I deal with the issue of costs actually incurred by Geowash in establishing Geowash franchises later in these reasons.

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Evidence of Ms Ali not reliable 462 I find that Ms Ali was not a witness of truth. Her evidence was characterised by lies, exaggeration and misrepresentation. In key respects, it was inconsistent with contemporaneous records including her own emails (some examples of which I have already addressed). As to important issues such as how estimates were calculated for the purposes of invoicing franchisees, the legal advice that she alleged had been obtained by Geowash and how the monies obtained from franchisees had been expended, her evidence was vague, inconsistent, very general and without any supporting documents. As to financial matters it was unsubstantiated reconstruction undertaken many years after the expenditure was incurred but presented with a false assurance and conviction. When Ms Ali was confronted with the obvious problems with the way her figures had been prepared she refused to concede that there was any difficulty. For those and the following reasons, I do not accept her evidence unless it was corroborated or it amounts to an acceptance of an aspect of the case alleged by the ACCC. 463 Ms Ali was asked about her education and business experience. She undertook her primary and secondary education in English. As to her tertiary education, she began by saying that she did a small course in information technology and then moved to Australia for her Bachelor in business accounting. She said she started off studying a diploma in broadcasting (journalism) and then changed to accounting. Later, in her evidence Ms Ali said that she completed her studies in broadcasting journalism. She was asked where she did her accounting studies and she said Monash University. In the course of her evidence, she created the impression that she had obtained a Bachelor's degree from Monash University. She could not explain why she was not included in the register of graduates from that University. After her evidence was concluded she produced a copy of a certificate of admission to the degree of Bachelor of Business (Accounting) from Central Queensland University. She then said that she did the courses and became a certificated practising accountant. However, she gave up her membership in 2016 or 2017 and, in her words 'was not a tax accountant any more'. 464 As to qualifications in law, Ms Ali began by saying that she had undertaken commercial law courses in 2014. Under further questioning she said that it was a short term course that she withdrew from because she could not find the time. She said it was just in January 2014. She then said it was a private course. When asked to provide the name of the institution she said it was a correspondence course and she did not remember the name of the institution. Immediately after that she said she had a private tutor. She said his name was Phillip Brown and he was not part of an institution. Then she said she was not sure if he was part of an institution. She said she did some courses with Mr Brown and he provided private tutoring by coming to her maybe six times. She said that each session was three hours. 465 Ms Ali then described the law tutoring as a platform to start some further studies in law. When asked how it could be a platform she answered that she wanted to see if she was interested in law. She said that further down the track it would lead to a certificate in legal studies. When asked whether that was all of the study in law, Ms Ali volunteered: That's all the study I've done in law, apart from the subjects that I've done when I completed my Bachelor's of Business Accounting. 466 The case advanced for Ms Ali and Mr Cameron placed considerable reliance upon the Franchise Overview document I have described earlier in these reasons. Ms Ali accepted that the information in the Overview had been provided for the purposes of promoting Geowash and to inspire confidence in people who read the document that they were dealing with a person with particular experience and expertise. 467 After the above evidence, Ms Ali was taken to certain statements in the Overview about her education and experience. The statements were: Her qualifications as a CPA with a Bachelor of Business Accounting, a Diploma in Broadcasting Journalism, her Certificate in Information Technology and her current studies for a law degree have all helped Sanam develop a broad base of knowledge at such a young age, but it is her desire to succeed and help as many people as she can to be part of that success that drives her. And yes Sanam Ali is absolutely passionate about her cars! Passion has driven Sanam to take over the Geowash Australasian rights. 468 Pressed to explain the difference in relation to the statement that she was studying for a law degree and the evidence that she had given, Ms Ali, despite her earlier evidence, maintained that she was studying law courses as a platform to pursue further studies. Eventually, Ms Ali conceded that the statement that she was studying for a law degree was false. 469 Ms Ali was asked about what she did after she received her Bachelor of Business Accounting. She began by saying 'I provided consulting services to my family who was engaged in loans - lots of private loans, mezzanine finance and engaged with a company called Mortgage Capital Group'. She said she provided those services pursuant to a consulting agreement. Later she said that she was working on 'commercial deals, construction deals, private loans, equity finance, mezzanine finance'. Eventually, her evidence was that the work was as a finance broker and she would assess applications for finance for commercial and residential clients for Mortgage Capital Group and also take them back to her family to lend money and sometimes she would lend money as a private lender. 470 In other evidence, she said that when she was at University she did some part-time work assisting her brother's clients. She said 'he was providing consulting services to a lot of his clients in obtaining a loan - commercial loan or residential'. He also was at University at the time. When pressed to explain what was meant by consulting, Ms Ali said: Analysing the application, helping lodge the application - the loan applications. Quite a few - range of services, including meeting the clients, going through their backgrounds, going through how they're after various types of loans. 471 Ms Ali said she did this work on her own account as a sole trader with her own Australian Business Number. Her brother had some clients and when he was busy he gave those clients to her or they both worked on common clients. 472 When Ms Ali first mentioned Mortgage Capital Group she said that members of her family pursued their interest in purchasing it after a while. Then she referred to members of her family purchasing some of the shares of Mortgage Capital Group, but she did not know the arrangement. When pressed she persisted with evidence that she did not know the nature of the arrangement that members of her family entered into with Mortgage Capital Group. Then she said that she did not know whether it was true or not that members of her family made such an arrangement, but that was her belief because that was what she had been told by family members. The records of the company showed that no member of Ms Ali's family had been a director or shareholder or interested in a company that had been a shareholder in Mortgage Capital Group, which she accepted when the records were put to her. 473 Ms Ali also said that she gained experience in tax accounting. At first she said this was through fulltime employment with quite a few different firms, one being Stanton Partners. This was scattered throughout 2006. She said it was with four of five firms. Then, she said it was in 2006 and 2007, and she was employed 'on a part-time basis, full-time basis, casual basis'. When tested about how this could occur in such a period, she then said it was in 2006, 2007 and 2008 for periods over about 12 months with each firm. She then described them as being for short periods, not on a consistent basis. Then, Ms Ali said it was not full-time it was part-time. 474 Ms Ali was asked about the activities of HTN. It was put to her that it was involved in the provision of ATMs and she responded that 'was one of the aspects of the company'. She then said it was engaged in providing consulting services for different industries being ATMs, breathalyser machines and further down the track, Geowash. This emerged as being a business of placing ATMs and breathalysers in pubs and restaurants where they could be used for $2 each time. When she was asked to confirm if that was the extent of the activities, there was an extended delay before she confirmed that to be the case. 475 Then she was asked to confirm that the full extent of her experience had been covered prior to moving into Geowash. She responded: I have provided services in different fields. For example, I have provided - at uni I was doing work part-time, and I was providing services to disabled students. That was one of my uni jobs. So I have done a few roles. I have performed a few other services, in terms of my career experience. 476 This suggested that there was other experience. However, Ms Ali then confirmed that there was nothing else. 477 It can be seen that for each topic, Ms Ali began with a grand statement overstating her experience in respect of involvement in legal studies, financial services, experience in tax accounting, the activities of HTN and her provision of services in different fields. Then, after being pressed in cross-examination, the inaccuracy and exaggeration in her evidence was exposed. The way in which this occurred demonstrated a willingness to persist with maintaining evidence that was false or overstated. As a result, no confidence could be placed in her testimony. 478 It was then put to Ms Ali, that contrary to her statement in the Franchise Overview she had never built a financial services firm. She said that she understood firm to mean a company. She accepted that she had never built such a company, but she then claimed that she had built such a business as a sole trader. She said that the reference in the Franchise Overview to firm was to Mortgage Capital Group, 'but for the consulting services provided to it'. Later she changed this evidence to be that the firm was the work that she did as a consultant to Mortgage Capital Group. She also gave evidence to the effect that the statement about building a financial firm was a reference to her activities as a sole trader, which could only be a reference to what she did to help her brother when she was at University. The statement in the Franchise Overview that Ms Ali had built a financial services firm was plainly incorrect. Despite being confronted with the obvious error she refused to plainly acknowledge that is was untrue. At best, it was a very considerable and material exaggeration of her experience. Importantly, it did not concern an incidental or minor matter. It was a significant part of a key Geowash document that was directed to persuading potential franchisees to enter into an agreement with Geowash. 479 At no time during this evidence did she mention a company House of Finance Pty Ltd. However, later in her evidence she claimed that it was one of the financial services firms she had referred to in the Franchise Overview which 'we established from a technical perspective'. This evidence appeared to be a statement that she established the firm in the sense of setting it up rather than building it into a financial services business. She said she did not remember the company when she gave earlier evidence. Ms Ali said it did the same as what she had done as a sole trader. She said she ended up lending $500,000 through the company and it did a few minor deals here and there. When asked how many, she said 10. 480 House of Finance was a company established with a company controlled by Mr Cameron's wife Mary as its sole shareholder. Ms Ali was the sole director. She said she did not want to be the shareholder because she was wanting to pursue interests in other industries at the time and it did not suit her personal goals. She could provide no satisfactory explanation as to why she would say on the one hand that she lent $500,000 of her own money through the company and on the other hand was not a shareholder. 481 Ms Ali was asked about a statement in the Franchise Overview that she had developed and licensed efficient business models and licensed those into other countries. The reference to 'efficient business models' was said by Ms Ali to be a reference to licensing ATM machines which she described in the following terms: It was identifying the actual concept where there was a business opportunity. For example, the government had deregulated the ATM industry at the time, where private investors can actually invest into ATM machines and made a return on the investment with a $2 margin…that involved identifying the actual - the opportunity of deregulation that took place at the time. That involved identifying ATM suppliers. That involved identifying the roll-out of the ATM machines. That involved identifying sites for ATM machines. That involved placement of those machines, technical aspects of it. It was - it was a concept that was developed. 482 After cross-examination it emerged that ATM machines had been licensed by HTN for use in locations in Australia and the 'ATM concept' was sold to a third party in the United Arab Emirates, but nowhere else. The breathalyser concept was licensed for New Zealand, but nowhere else. The impression created by the statement in the Overview was of much grander development and licensing activities. 483 I find that Ms Ali acted in a modest way to assist in mortgage broking by her brother and Mortgage Capital Group. She had limited experience as an employee working for short periods with various accounting firms. She had not established a successful finance business. She had not undertaken any studies towards a law degree. She had not obtained a degree from Monash University. Her exaggerated descriptions in the Franchise Overview of what she had done grossly overstated what her experience had been and the nature of the transactions in which she had been involved. Her experience was not of the kind described in the statements she made in the Franchise Overview. These matters were not peripheral. The statements made about the experience of Ms Ali were an important aspect of her dealings with franchisees by which she sought to engender confidence in prospective franchisees in the Geowash brand and business. Her willingness to give exaggerated and untrue evidence as to these matters reflected adversely on her credibility generally. 484 Ms Ali claimed that Mr Cameron 'supported the capital requirements' of the Geowash business. She was cross-examined about that claim. She said he had invested monies into Geowash over six years. She could not recall when he first invested. She said it was on an inconsistent basis. She said she had invested a lot more than Mr Cameron. She could not recall how much he invested. She said he made loans. Asked to identify a document recording the loans, she said she did not have a document accurately recording that figure. When asked about the source of the monies used to buy the rights to Geowash in Australia Ms Ali said she could not recall the source of those funds. She could not recall whether Mr Cameron provided any of those funds. This evidence was entirely unsatisfactory given the commercial significance that would attend arrangements by which Mr Cameron (who was, on Ms Ali's version of events, a consultant with no interest in Geowash) might invest or lend monies to Geowash and Ms Ali's training as an accountant.

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Charges to franchisees 485 As to the dealings with franchisees, Ms Ali said in her main affidavit in the proceedings that franchisees were told by her that the Disclosure Document provided to franchisees contained the franchise agreement and explained all the details that a franchisee needed to know about a Geowash franchisee. She said expressly that these matters were communicated by her to each of Mr Brar, Mr Kumar and Mr Khalid. She confirmed that evidence when cross-examined. 486 It was apparent from her evidence that Ms Ali was familiar with the terms of the franchise agreement and the Disclosure Document. In her dealings with franchisees she knew that the Disclosure Document (including a draft of the franchise agreement) had to be provided to prospective franchisees for a period of time before they could be asked to enter into the franchise agreement. I find that she well-understood that it was the Disclosure Document and the franchise agreement that were the instruments that established the terms of the franchise agreement, not the Franchise Overview, Franchisee FAQs and Your Next Step documents. Indeed, in her affidavit evidence Ms Ali went to some lengths to seek to justify the charges that had been made by Geowash as being for costs described in the Disclosure Document. The charges were said to cover costs related to work that was done. That is to say, it was claimed that the invoices by Geowash were for actual costs incurred by Geowash. 487 I also find that Mr Cameron was familiar with the terms of the Disclosure Document and the franchise agreement, particularly the provisions about charging. He helped Ms Ali secure the licence for the Geowash brand through HTN. He provided consulting services for that purpose. He was involved in dealing with Mr Verebes about the terms of the franchise agreement that demonstrated familiarity with the significance of actual costs for what could be charged under the franchise agreement. Mr Cameron was closely involved in dealing with a number of franchisees. He knew the nature of Geowash's charging practices and that the same approach was applied to all franchises. He was involved in dealing with franchisees about the amount they would have to pay. He received a substantial financial benefit from all these dealings in the form of commissions. 488 When Ms Ali was asked about the staged payments by which franchisees were invoiced by reference to an agreed amount in two instalments, that practice was justified on the basis that there would be costs 'along the way' and was not justified by reference to any estimate of the actual costs. There was no evidence of a process by which the likely costs for each franchisee outlet would be assessed. Indeed, when it was put to Ms Ali expressly that she had no idea what the fit-out costs would be when the invoices were issued, Ms Ali's explanation was to point to the Geowash 'billing practice' rather than any assessment of likely costs that had been undertaken. She said the staged payment was not a fit-out payment: 'It was Geowash's billing practice'. 489 At one stage, Ms Ali's evidence was that the costs of setting up the South Fremantle site were used as a reference point for estimates as to cost provided to franchisees. Her evidence in this regard emerged for the first time in cross-examination. It emerged after it was put to Ms Ali that she did not have a system for recording what she or Geowash employees were spending their time on. She agreed with that proposition. Then, it was put to Ms Ali that as far as she was concerned she could charge staged payments without reference to actual fit-out costs. She answered: Those stage payments were charged at a stage in a price range that was - that was provided to the franchisee. The reference point was Geowash South Fremantle, which was sold at a fixed price … where we sold that franchise for $250,000 plus GST. The site ended up costing more than $250,000 plus GST. No further costs were passed on to the franchisee, which was from memory an additional $60,000 worth of costs. 490 There are a number of points to be made about this response. First, the calculation of staged payments by reference to the cost of the South Fremantle outlet was not a way the case was opened for the respondents. Second, there is no reason why the costs in South Fremantle would correspond to sites in other places. Ms Ali gave evidence to the effect that she communicated to franchisees that costs would depend on the particular site. Third, the detailed affidavit provided by Ms Ali did not explain the invoiced amounts as being based upon South Fremantle as a reference point. Fourth, having regard to the way Ms Ali dealt with many questions, the answer appears as an explanation constructed in the moment to explain why there were no records on which to base the invoices sent as part of the staged payments. Fifth, as I have recounted, the budget amounts discussed with franchisees were not consistent. If the costs of South Fremantle was the reference point for cost you would expect that particular amount to be discussed with each franchisee. It was not. Rather, on the evidence as a whole, South Fremantle was presented as an example of a fit-out that was used to justify different invoice amounts to different franchisees for an equivalent Geowash outlet. Finally, there is no logic in using a reference point that was, on Ms Ali's account, $60,000 less than the cost. I do not accept that the staged payments were based upon South Fremantle as a reference point. 491 Ms Ali gave other evidence to the effect that there could be an agreed amount or lump sum to buy a franchise and that the staged payments were based upon that form of arrangement. When confronted with the inconsistency between the terms of the franchise agreement and any agreement to pay a lump sum for a franchise, Ms Ali said that she followed legal advice. I deal with the terms of the legal advice below, but Ms Ali's evidence was that she told her lawyers about the staged payments. 492 In the case of the Domain Car Park franchise, the amount of $230,000 was agreed as a maximum amount that was payable. It was not a fixed amount. In the result, there was an extended dispute as to whether the fit-out that was provided matched the description that had been given. In the course of that dispute, Ms Ali communicated with Mr Singh on the basis that the franchise had been costed and budgeted at $230,000. However, no evidence was produced of any such process for costing and budgeting. Nor did Geowash have the information to undertake such a process. Later, Ms Ali sought to assert that there had been a fixed sum agreed for a limited kind of fit-out involving the use of car wash carts. Her evidence as to all of these matters lacked consistency and credibility. 493 As to other franchisees, on 16 April 2014, Ms Ali sent an email to Mr Verebes, the lawyer acting for Geowash. It attached an instruction sheet for a new franchise agreement to be entered into with M & S Enterprises Australia Pty Ltd. The email said: Please note, I am selling a fixed site model with cafe (so like a hand car wash cafe style) and the price is $250,000 plus GST. Is there any change required to the documents to reflect this as obviously it costs less to set up with the balance being to cover my profit and executive time and opportunity cost? 494 Significantly, the email indicates that in the particular case there was to be a sale of the franchise for an agreed price and this was a different course to that which was otherwise followed, hence the need to ask about the manner of charging. More fundamentally, it reveals the view of Ms Ali that the actual costs of setting up 'a hand car wash café style' outlet were less than $250,000 plus GST, but the difference between that amount and the actual cost was to cover 'profit and executive time and opportunity cost'. Ms Ali and Mr Cameron gave no evidence to suggest that other franchisees were told that the amounts they were being invoiced by the two staged payments were to include profit for Geowash. On the contrary, Ms Ali and Mr Cameron gave a confused account seeking to establish that the amounts invoiced by way of staged payments were for actual costs, including project management undertaken in-house by Geowash. So, after being taken to the email to Mr Verebes which refers to a 'price' of $250,000, Ms Ali said that her understanding was that if all the other charges and the expenditure on the fit-out came up to $175,000 then the franchisee would only have to spend $175,000. 495 Ms Ali agreed that her understanding was that franchisees were to be invoiced on the basis of staged payments. The staged payments provided for an establishment fee and then 50% of estimated costs to be charged in two instalments, one at the time the site was identified and one when the fit-out works were to commence. She said that her understanding was that costs and expenses could be invoiced in accordance with the definition of those terms in the franchise agreement as well as the definition of franchise costs. It was unclear from her evidence whether Ms Ali was advancing a case that Geowash simply charged the amount that was discussed with franchisees when entering into the franchise agreement or whether the invoices for the staged payments were for an amount on account of the actual fit-out and set-up costs. She was simply unable to give clear evidence as to the nature of the charges and her evidence justifying the charges was not consistent. 496 Mr Cameron explained the staged payments as having been developed for payment up-front because you could not be 100% certain as to what the costs of fit-out would be. This evidence sought to characterise the staged payments as being for the costs of fit-out which he said were assessed by Ms Ali. However, the evidence of Ms Ali did not describe a process of assessment of costs beyond the evidence concerning the use of South Fremantle as a benchmark for actual costs (which I have not accepted). 497 The following evidence was given about the actual charges to the franchisees. 498 Ms Ali agreed that there was no system for recording costs associated with site inspections. Indeed there was no system for allocating any costs to a particular franchisee or a particular site. 499 As to the costs of site selection, the process was ad hoc and unsophisticated. The selection of a site involved little more than identifying potential sites that were available for lease and then presenting them to franchisees to view. The evidence showed that generally there was only one inspection attended by Ms Ali or Mr Cameron before the site was selected. There was no evidence of assessments being made as to suitability. The site alternatives were simply presented and the franchisee invited to make a choice with little more than a statement from Ms Ali or Mr Cameron as to likely cost. Franchisees were asked to sign a document to confirm that they had been presented with alternatives and had made a choice themselves. 500 Mr Cameron gave evidence that Geowash used a company called McCready Group to find suitable sites and that they charged $8,000 per site. However, I was not taken to any other evidence to support the actual involvement of McCready Group in selecting particular sites or in rendering fees to Geowash for doing so. Immediately after referring to McCready Group Mr Cameron was asked about the cost for negotiating a lease. He gave evidence that the cost was the cost to Ms Ali of paying for the services: 'If she is using McCready Group or a project manager'. He then said: 'In the instances she is paying me, the costs are what she pays me which, in this instance would be 20 per cent of the stage payments'. Further, in her affidavit evidence, Ms Ali said that: Geowash employees predominantly project managed "in-house" the process of site selection, lease negotiation and liaising with the architects and ton planners regarding development drawings approval application and building permit approval application rather than outsourcing the management aspect to external consultants. My experience of outsourcing such tasks was that it created an unnecessary increase in costs of the franchise construction process. Project management added to any project cost, hence Geowash, myself and staff carried out management as much as possible to reduce costs. 501 Based on the above evidence I find that Geowash did not generally incur charges by McCready Group in relation to site selection, but limited assistance was provided to franchisees in relation to site selection by Ms Ali and Mr Cameron acting 'in-house'. 502 Ms Ali claimed that Geowash was entitled to include charges for management fees and that charges were made for management fees. As to those charges, Ms Ali agreed that there was no formula for such fees and there was no hourly rate or percentage for such fees. Mr Cameron did not itemise the hours that he spent on each franchise site. It follows that there was no record or system by which estimates might be given or charges raised for any management fee. Ms Ali said that 'a South Fremantle project manager has done that for Geowash and charged accordingly'. Ms Ali and Mr Cameron both said that a decision was made to do the management work 'in-house'. So, it appears that after the South Fremantle site was established a decision was taken for Geowash to make the arrangements for the fit-out to be undertaken by Geowash rather than to engage an external manager. Perhaps it was this decision that led to the change to the definition of Fit Out Costs in the franchise agreement so as to include a charge to be made by Geowash for design and project management. However, this was not a matter that was the subject of evidence. 503 However, what is significant is that there is no evidence of steps being taken to establish a fair and reasonable fee for design and project management. Nor was the time spent or costs incurred tracked or allocated. The invoices issued to franchisees provided no itemisation of management fees or other charges. There was no breakdown of any costs and no evidence of an estimate or budget or calculation of such costs for an individual franchisee. 504 I find that the staged payments were determined by Ms Ali on the basis of a general view that Geowash could cover its overheads, meet the actual costs of fit-out and set-up and also make a profit on setting-up each site if an overall amount of at least $250,000 was charged to franchisees. The view was also taken that if costs were greater than what was expected then there could be further amounts charged. On that basis Ms Ali and Mr Cameron dealt with franchisees by obtaining information on what they were willing to pay, expecting that they would be paid commissions and Geowash would expend much less than the invoiced amount on setting up a franchise outlet (see below).

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The payment of commissions by Geowash 505 Mr Cameron said he was paid a $150,000 retainer by Geowash 'for turning up for work' plus commission. Mr Cameron said he was paid 40% of the establishment fee for each franchise. Then he was paid a further 20% to do the work of putting the car wash together. It was to be 20% of the total payments made by the franchisee. He described it as a payment for services, not a commission. He said it was 'basically to commission the car wash'. When asked why the payments made to him were described in the records as commissions he said that he did not have any input into that description. 506 Mr Cameron gave some evidence to the effect that Ms Ali had a discretion as to whether he was paid all of the 20% based on her assessment as to his level of exertion in undertaking the commissioning and the amount of time that she spent doing those tasks. He also gave evidence that the 20% amount itself was set by Ms Ali by reference to an assessment of work being done in Geowash rather than outsourcing it. When asked how that assessment was made he could offer no explanation. When asked how the calculation was made as to his level of exertion when there were no records he could offer no explanation. 507 The evidence as to actual work being done by Mr Cameron in supervising the establishment of the car wash is scant. He was not undertaking the work of a project manager. Builders were engaged to undertake work on the sites. Architects were engaged to prepare drawings where required. No doubt some time was spent by Mr Cameron making such arrangements. However, as he himself said this was work that 'evolved'. It was not work that was contemplated at the time the 20% payment was agreed. 508 When Ms Ali gave evidence about the 20% payment, her evidence made it abundantly clear that the further 20% paid on amounts invoiced to franchisees was paid as a commission for achieving the sale. Her evidence was given at two points in cross-examination. The first time the topic was raised she said that Mr Cameron was paid a salary of $150,000 a year, 40% of the establishment fee and 20% of the staged payments. She referred to these as 'an annual amount of $150,000 plus commissions'. As to the payments to Mr Cameron, she said 'he would get a commission on sale of a franchise, and he would get a percentage on the sale of the franchise'. 509 Ms Ali acknowledged that the word 'commission' was used to describe the 20% of the staged payments, but she said that the word 'commission' was applied to various services that were provided by Mr Cameron for 'lease negotiation, site selection, project management'. There was no suggestion at this point that the commissions were shared depending upon the amount of work done by Mr Cameron or that there was any assessment by Ms Ali as to how much of the 20% was to be paid to Mr Cameron. Her repeated evidence was simply that Mr Cameron was entitled to 20% of the staged payments. 510 Later, Ms Ali was asked further questions. The following answers were given by Ms Ali when she was asked how she was paid. She first gave a very confused response. Then she said a salary of $150,000 was factored in. Then her evidence was as follows: So Mr Cameron was getting $150,000 per annum, and you were getting $150,000 per annum. That was factored in? ---That's correct. ... So that's the starting point, and what's next? ---So factored in $150,000 plus sales, commission on sales, so 40 per cent of the franchise establishment fee. … So you got 40 per cent of the establishment fee? ---No, 40 per cent of the establishment fee was commission that Charles Cameron got or I got, depending upon who was involved in the sale, more or less. So if it was my sale or his sale or both of us were involved, it was fairly distributed between the parties. … Okay. So that's the next source of your payment. So we've got 150,000 and that's how you remunerated out of the establishment fee. What else did you -how else were the amounts that you calculated? ---20 per cent of the staged payment. So that's - you got 20 per cent of the staged payment and Mr Cameron got 20 per cent of the staged payment? ---So 20 per cent of the stage payment was, again same scenario, if I was involved in the deal, Mr Cameron got - I got majority of the 20 per cent. If - sorry, if Charles was involved, he got majority of 20 per cent. If we both were involved, then we fairly split it. Now, you use the word "majority", so is it the case that even if - I want to understand how this happens. So even if it was mostly your work ---? ---Yes. ---in getting the sale you would only - still only get the majority of the 20 per cent? What, some would still go to Mr Cameron? ---Mr Cameron was involved in almost all of the deals with me on a regular basis, so Mr Cameron would get something from the sale as well. You were both basically involved in all the deals, weren't you? That's correct. 511 It is clear from this exchange that the event which gave rise to the obligation to make the 20% payment was the sale of the franchise and then there was a right to receive 20% of the staged payments. The staged payments were the amounts paid for the fit-out and set-up of the franchise. 512 Ms Ali said she was the one who worked out the formula in terms of how much was to be paid to each of them. 513 Ms Ali's affidavit evidence was not in the same terms. As to commissions, her affidavit said: … the term 'commissions' as described in the bank statements relating to Geowash were to describe a number of activities that were conducted by both Mr Cameron and I in the provision of services to the franchisees to set up the franchise outlets. The term 'commission' is a generic terminology used which relates to various services provided including but not limited to assisting the franchisee in obtaining council approval for the setting up of a car wash in a particular location. To be precise, the payment of 'commissions' covered costs related to (but not limited to) the required work done for services such as site selection, lease negotiation, town planning application, development approval, building permit, associated costs of delivering such services and project management relating to the franchise. Costs i.e. commissions incurred for rendering such services in relation to Establishment Costs are described in provisions 13.3 of the Disclosure Document … … As both Mr Cameron and I expended significant amounts of time assisting Franchisees to source, review and negotiate site availability on the Franchisees' behalf, Geowash paid us for the services provided to the Franchisees for services provided for assisting them with securing the site. 514 It can be seen that the justification for the commissions was principally the work done in assisting with securing a site. However, the Disclosure Document identified a fee for the costs of negotiating and procuring a lease for the premises of up to $8,000 payable to Geowash or the leasing agent. As to fit-out costs, the franchise agreement allowed Geowash to charge for actual costs. 515 The affidavit made no mention of the commission arrangements and the agreement to pay 20% of the staged payments. Significantly, in her affidavit Ms Ali described the work being done on development approval as being done by 'Geowash Head Office employees and its consultants'. As to project management, Ms Ali said in her affidavit that 'myself, and staff carried out this management as much as possible to reduce costs'. As I have noted, later in her affidavit, she described the commissions as being paid because she and Mr Cameron expended significant amounts of time 'assisting Franchisees to source, review and negotiate site availability'. 516 I find that the evidence of Ms Ali to the effect that the commissions were paid for work done was constructed after the event in an attempt to justify the large amounts of commissions that she and Mr Cameron received. The evidence shows that Mr Cameron and Ms Ali were involved in dealing with franchisees about the process of site selection. No doubt this was why Ms Ali's affidavit focussed upon this aspect as a justification for the payment of the commissions. However, they did not undertake the structured analysis described by Ms Ali and the franchise agreements did not allow for significant charges in relation to site selection. It was only when Ms Ali and Mr Cameron gave their oral evidence did they suggest that the payments were for project management. Given the way in which the evidence emerged, I do not accept that it accurately portrayed the reason why commission payments were made to Ms Ali and Mr Cameron. 517 As Ms Ali accepted, the accounts for Geowash show that in the beginning years large amounts of money were coming in from franchisees and large amounts of money were being paid out to Ms Ali and Mr Cameron. Later there were greater amounts of expenditure on franchisees. Ms Ali and Mr Cameron were being paid the commissions irrespective of the degree of activity in fitting-out and setting-up individual sites. 518 I find that the description used by Mr Cameron to describe the work that he did as commissioning the carwash was one invented after the event. The fee that was agreed was a 20% commission payable on all amounts paid by franchisees to Geowash after the establishment fee. It was a fee that was agreed for making the sale and over time he was asked to undertake some further activities to assist in the process of arranging the fit-out. This developed in an ad-hoc way and did not involve him undertaking a role that may be equated to a project manager. 519 I do not accept his evidence that the payment of the 20% depended upon the level of exertion that he did on a particular site. He began by saying there was a payment of 20% and then said that whether he was entitled to 20% depended upon the discretion of Ms Ali and her assessment of his level of exertion. Then later he accepted that his understanding of his contract with Geowash was that he would be entitled to 20% of the payments received from a franchisee on any occasion when a car wash was sold. He regarded himself as having a legal entitlement to the money when there was a sale. He was paid when Geowash had the funds to do so. 520 Further, his evidence was that if there was a refund of monies to a franchisee then there would be an adjustment to his 20% entitlement. There was no suggestion that the adjustment depended upon any evaluation of the extent of any exertion that may have been undertaken by Mr Cameron in the meantime. 521 The banking records of Geowash show that payments were made to Mr Cameron when payments were received from franchisees and Geowash had the funds. There were instances where those payments were made soon after the funds were received by Geowash and well before there could be any assessment as to the level of exertion undertaken by Mr Cameron. Further, Mr Cameron maintained no time records as to what he did and kept no information about the tasks that he undertook. 522 I find that the arrangement made by Geowash was to pay 40% of the franchise establishment fee to Mr Cameron and 20% of all fees after that (including staged payments to cover fit-out and set-up costs). Payments were made to Mr Cameron on that basis. These were commission payments for securing the sale and that is why they were described as such when the payments were made. After the event, Ms Ali and Mr Cameron have sought to justify the payments on the basis that they were for project management services when that was not the case.

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Evidence as to expenditure by Geowash in setting-up franchise sites 523 On the third issue as to where the funds received from franchisees were spent, there were no contemporaneous records. Geowash kept no records allocating expenditure to individual franchisees. Ms Ali gave evidence of a reconstructed record of expenditure that she claimed had been incurred in meeting Geowash expenses relating to the franchise business. I do not accept this evidence for four reasons. First, my view that she was not a credible witness. Second, the evidence of Ms Ali was that she used allocations made by her accountants when preparing end of year financial records. However, there was no indication as to how the accountants undertook that task given there were no records. The only source of the information could be Geowash itself. So, there was evident circularity in using the accounting information. Third, it was flawed conceptually. It was based on the premise that if funds from franchisees were expended on Geowash related costs then that expenditure was appropriate and consistent with the arrangements that had been made with franchisees. For reasons I have given this was not the case. Payments to Geowash by each franchisee should have been expended only on amounts provided for under the franchise agreement. Fourth, Ms Ali's reconstruction was demonstrated to be unreliable. Ms Ali was forced to concede that significant costs included in her reconstruction were not Geowash expenses, or she gave implausible explanations as to how she had identified various items as Geowash expenditure. 524 Ms Ali also described in rather grandiloquent terms the tasks that were undertaken for franchisees in securing sites and arrangements with landlords. She continuously listed in apparent detail the nature of tasks that had been undertaken, both in her affidavit and in her oral evidence in a manner that was evidently calculated to give the impression that much work was undertaken in relation to franchise sites. However, the lists were in general and generic terms. I find that they overstated the work that had been undertaken. There was little evidence of specific tasks. There was no evidence at all of detailed costings or estimates for fit-out, approvals and management costs undertaken for any particular franchise. There was no documentary evidence of costing or estimates. 525 For example, Ms Ali described the site selection process as being 'comprehensive in nature'. She listed the process as involving the following: (a) Have a workshop or a discussion with the franchisee to identify the franchisee catchments, where the franchisee is looking for sites; (b) Establish and align the franchisee goals in line with the Geowash brand goals; (c) Within nominated areas, identify key areas likely to best fit the criteria (major roads, centres, junctions etc.) to use as a basis for analysis of planning opportunities and constraints; (d) Visiting the site includes drive by, contacting and organising the landlord's agent to allow a nominated member of the Geowash team to inspect the site; (e) Undertaking an assessment of the planning framework (zoning, structure plans and other local policies), specifically as it affects the nominated areas, to identify those areas where a carwash use would be prohibited, or have a risk of failure; (f) Search local council, make contact with the council planning officer, check zoning of the site, discussions with planning officer, obtaining the planning officers and council feedback on Geowash's consideration to have a carwash and detailing café site; (g) Speak to landlord's agent, obtaining a site layout, understanding the site layout including size, current fixtures and fittings, current services available onsite, location of services such as main switchboard, electrical, drainage, hydraulics etc; (h) Creating a site portfolio to understand the suitability of premises for a hand carwash and detailing café; (i) Creating and designing a concept layout sketch, size measurement using the knowledge, expertise, intellectual property guidelines regarding traffic flow, production line, configuration of location of wash bay, vacuum bay and finishing bay; and; (j) Understanding key locational criteria, the surrounding operators, car yards, retail customer ratio, corporate customer ratio etc. 526 The evidence before me did not reflect a process of this kind. Rather site selection involved an ad-hoc identification of sites where a car wash may be established. There was no evidence of a 'workshop' with the franchisee. There was no process of alignment between the franchisees goals and the goals of Geowash. There was no structured or organised process by which planning opportunities and constraints were identified. I find that exaggerated evidence of this kind which also dealt with lease negotiation, development approval, alleged design documentation and tender process and project management grossly overstated what was actually done by Geowash and was an attempt to justify after the event the large payments that had been made to Ms Ali and Mr Cameron. 527 Mr Cameron was said to have undertaken project management for the sites. He had no work experience referable to project management. He had spent most of his working life in various sales roles and as a mortgage broker. For much of the time that he was a mortgage broker his role was to prepare loan applications because he was subject to an arrangement under Part X of the Bankruptcy Act 1966 (Cth). His role at Geowash was to secure franchisees. He gave no evidence about his systems and practices or work that he did as project manager. 528 I find that, in fact, not a great deal of substance by way of project management was done by Mr Cameron having regard to the amounts paid. Large commissions were paid to Ms Ali and Mr Cameron in a manner that was not permitted by the franchise agreements. The commissions were the first payments to which funds received from franchisees were committed. When investigations by the ACCC commenced and monies from new franchisees dried up, Ms Ali did contribute some of her own funds to Geowash to cover costs. However, this was only part of what had been taken out of Geowash and was necessary because such large amounts had been removed. The fact that these contributions were made did not detract from what had occurred up until that point in time. 529 There was confused evidence from Ms Ali as to the nature of the two 'staged payment' invoices. At times she referred to the invoices as being part of the 'purchase price' for each Geowash franchise. As I have noted, the invoices themselves described the amounts as being part of the purchase price for the franchise. At other times, she referred to the invoices as being requests for costs on account of fit-out as provided for in the Disclosure Document and the franchise agreements. For example, in her affidavit she referred to invoicing by stages as 'simply a shorthand way of requesting the costs of the fit out up front as allowed in accordance with clause 4.7(c)'. 530 The staged payments were referred to in the documents provided by Geowash to franchisees before the Disclosure Document. They refer to the staged payments as being for the 'purchase price'. However, as I have noted, the franchise agreement did not provide for payment of a purchase price. Save for the case of the Geowash Fremantle outlet, the evidence of dealings with franchisees was not to the effect that a purchase price was agreed. Rather, a 'price' was established by reference to a budget or amount that the franchisee was willing to spend. It was not a fixed amount. Nor was it agreed as the amount upon payment of which Geowash was obliged to deliver the outlet. It was justified by Ms Ali and Mr Cameron by reference to the likely cost of establishing the outlet, including fit-out and set-up. Therefore, it was not a purchase price in the usual sense. Rather, it was an amount determined by reference to the budget as discussed.

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Evidence concerning legal advice 531 Ms Ali gave very general evidence to the effect that she acted on legal advice. In her affidavit she said that Madgwicks prepared all franchise agreements and disclosure documents on an individual basis. She said that based on her dealings with Madgwicks she believed the franchise agreement and Disclosure Document reflected the billing practices of Geowash. Assertions to similar effect were made in the course of cross-examination. Expressed in those conclusionary terms the evidence is meaningless. 532 Ms Ali also gave general evidence that Mr Verebes was aware that some of the franchises were sold for a fixed price, that 'management and administration fees in relation to the identification of the site and construction of the carwash were to be recovered as part of the fees charged', up front fees were to be paid for the identification of the franchise location and construction of the carwash and there were to be staged payments. She did not identify when these matters were said to have been communicated to Mr Verebes. Ms Ali exhibited to her affidavit what she described as 'extensive emails, attachments, file notes and other correspondence concerning the legal advice that Geowash received between 2012 and 2016 in relation to its operations, including the various disclosure documents and franchise agreements'. For the most part the documents comprised drafts of franchise documents and emails exchanged with Mr Verebes on various topics that are irrelevant for present purposes. No submission was advanced on behalf of Ms Ali or Mr Cameron identifying particular emails or written advice which was of the character described by Ms Ali or recorded instructions of the kind described by Ms Ali. 533 Further, the particular issue that is of significance in these proceedings is whether Madgwicks was told that Ms Ali and Mr Cameron were being paid substantial commissions out of the staged payments and the monies were also being treated as available to be used to meet general operating costs and expenses of Geowash. If the commissions were not paid for project management and therefore were not Fit Out Costs as described in the Disclosure Document and defined in the franchise agreement (as I have found) then for the advice to have any relevance it would be necessary for Ms Ali and Mr Cameron to show that legal advice was given on the basis that sales commissions and general costs of Geowash could be paid from the staged payments. I have reviewed the documents relied upon by Ms Ali as well as the oral testimony of Ms Ali and Mr Cameron. For the following reasons I find that Madgwicks were not told that there were staged payments being charged to franchises, were not told that sales commissions were being paid to Geowash staff and were not told that the staged payments were treated as general revenue of Geowash that could be applied to meet general operating costs and expenses. Accordingly, Madgwicks did not provide advice as to those matters or on the basis that it was aware of those matters. 534 There is an email to Mr Verebes dated 11 May 2012 in which Ms Ali refers to a deposit of $10,000 which was being considered at that time as being the amount that franchisees would be required to pay as a deposit. The email was concerned with costs that might be deducted from the deposit if a party was to withdraw. It said that Geowash would incur costs to third parties who find sites and also incur costs liaising and travelling to establish the sites. However, the email is dealing with costs that might be charged if a franchisees does not proceed. It is not dealing with matters of relevance to the key issue in this case, namely whether Geowash can include the commission payments in the charges to franchisees if they proceed and otherwise use the money for the general purposes of Geowash. 535 There is an email dated 15 May 2012 in which Ms Ali refers to the possibility that a landlord contribution to fit-out might be retained by Geowash with the franchisee still to be charged for the full fit-out cost even though part of the cost had been met by the landlord. In that context, the email says: 'I know it would need to be disclosed to the franchisee that we keep any fit out contribution but do you think it matters as they are paying $149,500 for the franchise and any expected contribution would not be sold as being to their account anyway? Is this a possibility?'. The email is suggesting that it would be appropriate to keep the landlord's fit-out contribution because the franchisee is being told that they will have to pay a particular amount for the franchise. There was no evidence of the response to this email. 536 I note that a draft of the Disclosure Document at about that time (dated 19 April 2012) provided for a much lower range of set-up costs than was included in the agreements entered into with franchisees that were produced in these proceedings. It provided for a range of payments including the 'approximate cost' of the fit-out of the kiosk as being $35,000-$65,000. 537 Again this email is not dealing with the key issue. The reference to $149,500 is not a statement that there is to be an agreed purchase price. It is a statement that is to be read in the context of the charges that Geowash was expecting to render to franchisees at that time, including a charge for the cost of fit-out. There was no evidence placing the email in any context. 538 The documents produced by Ms Ali included an email chain with Mr Rajvinder Singh (which I have quoted above in the course of dealing with the evidence concerning the dealings with Mr Singh and the Geowash outlet established in the Domain Car Park). The chain began with questions being raised by Mr Singh concerning the franchise agreement. Ms Ali prepared answers and then sent an email request for the answers be checked by Mr Verebes before the response was sent by Ms Ali. 539 The questions asked by Mr Singh included a query as to whether there were any undisclosed commissions on goods purchased from Geowash and Ms Ali had answered that Geowash did not receive undisclosed commissions or rebates. It also asked 'Sanam the 230000 amount you have advised, that should include everything including the setup, initial payments, cafe setup etc'. Ms Ali responded 'Everything'. It is to be noted that this communication is not consistent with a fixed price being charged. It is referring to a cap on overall cost. It does not deal with management fees or other charges by Geowash concerning set-up of the site. It does not support the claim that there were instructions to Madgwicks on the key issue. 540 At one point in the course of cross-examination Ms Ali said that when Mr Rajvinder Singh asked for a cost breakdown (after the dispute arose as to the quality of the fit-out that had been provided at the Domain Car Park) she asked Mr Verebes about that specific point. Her evidence was that Mr Verebes said that there was sufficient cost breakdown provided in the Disclosure Document. She proffered this evidence to explain why she had not provided a breakdown of costs expended on the fit-out when a specific request was made by Mr Singh. 541 There is an email exchange in May 2014 between Mr Verebes and Mr Cameron concerning a proposed franchise agreement which I deal with below. 542 There is an email dated 29 January 2016 from Ms Ali to Ms O'Neill at Madwicks (copied to Mr Verebes). It sets out an instruction sheet for a new Geowash franchisee, Mr Gurdit Singh who will be setting up in Rockingham. It says that the establishment fee and all other costs are encompassed in 'a total price of $315,000.00 plus GST for which we have agreed to build the store'. The draft agreement prepared by Ms O'Neill made no change to the provisions of the franchise agreement that allow Geowash to charge for fit-out costs. This email is very late in the day. There was no evidence referring to the instructions. It is evidence that indicates that Madgwicks was aware that Geowash was agreeing a total price with some franchisees. However, it is not evidence that Madgwicks was aware that Geowash was charging commissions or applying staged payments to general Geowash expenses in cases where no fixed price was agreed. 543 The documents do show that a change was made in 2014 to the definition of Fit Out Costs to add the words 'including any Geowash management fees for managing the process of design and Fit Out' after the reference to 'management costs'. The evidence is that the change was applied from August 2014. However, that change did not authorise Geowash to charge a sales commission being 20% of the staged payments. Nor did it allow a general charge by Geowash for administration, travel and other costs. It permitted a specific charge for managing two matters, design and fit-out. A charge confined in that way was not made by Geowash. As I have noted, there was no evidence of Geowash charging any franchisee a management fee of the kind described in the amended definition of Fit Out Costs. 544 Ms Ali could not point to any specific instance where legal advice was given that Geowash could charge franchisees in the manner that it did. She gave very general evidence to the effect that she told her lawyers what she was doing and was advised that it complied with her obligations under franchising laws. Evidence of that kind does not deal with the key issue. 545 Having regard to the evidence as a whole, I accept that there was knowledge on the part of Mr Verebes and others at Madgwicks that on some occasions Geowash agreed a fixed price to set-up a Geowash outlet and that on other occasions it established a capped amount. However, this was not the usual case. I do not accept that Madgwicks was aware that for all franchisees Geowash charged general management and administration costs. The terms of the change made to the definition of Fit Out Costs in August 2014 was more limited. It only allowed for charges by Geowash for design and project management fees for the fit-out of a particular site. I consider it to be most unlikely that a lawyer who was advised that Geowash was including charges for general management and administration costs (and the payment of commissions) would amend the definition in that way. Further, there is no evidence that Mr Verebes or others at Madgwicks were aware of the practice of invoicing franchisees according to two staged payments determined by reference to an amount discussed with the franchisee. There is no evidence that Madgwicks provided advice as to the contents of documents such as the Franchise Overview, the Franchisee FAQs and the Your Next Step document. It was those documents that referred to the staged payments. The advice provided by Madgwicks concerned the Disclosure Document and the franchise agreement. There is simply no evidence of instructions by Geowash to any lawyers on the key issue or advice concerning the practice of paying sales commissions and applying the monies received from franchisees on the basis that they were funds that Geowash could apply to meet general operating costs and expenses. 546 In May 2014, there was an email exchange between Mr Cameron and a franchisee about a proposal that the costs to establish a franchise be capped at $250,000. In the exchange, Mr Cameron said to the franchisee: Re the investment of the $250,000 plus GST, not sure about your wording "actual spend" as no one would be itemising each dollar spent as there is obviously a lot of management time and expense in setting up an outlet, including Sanam's time and effort involved in lease selection, rent negotiation, dealing with councils etc. That couldn't really be tracked. The type of response we have had since the launch of the $250,000 offer including signed up franchisees indicates that our price is very low and the effect of supply and demand will see this price increase, particularly after the first site is established in Perth. We estimate it will come in or over the $250,000 plus GST and Sanam has agreed on these initial franchise appointments to cap the set up at the $250,000 plus GST. 547 The franchisee then proposed a schedule 3 to be included in the franchise agreement to reflect the commitment to a cap at $250,000. 548 Mr Cameron sent the draft schedule to Mr Verebes the lawyer acting for Geowash. In the covering email he included the communications with the franchisee and said: Effectively he [the franchisee] wants to be invoiced and pay only when tendered with an invoice with corresponding proof of payment by Geowash of expenditure on his site. There are many things that are not tracked such as executive time and this would not work or be approved. We also have a system of invoicing ahead of the game meaning that a deposit is placed for disclosure documents, then establishment fee, then 50% of the total investment balance once franchisee selects a site with the final 50% being due on approval of permit and when we are ready to instruct the builder. Effectively franchisees put the franchisor in funds to complete the project and pay on invoice. … I have spoken to him this morning and the concession made was we are happy that the attached invoice forms part of the agreement as in a Schedule 3 with the words underneath it along the lines of the parties agree that The franchisees investment will be capped at $250,000 plus GST for the initial set up of the business and in accordance with the items described in the invoice. 549 The email exchange records that an amended franchise agreement was prepared. The communications were copied to Ms Ali. 550 Ms Ali understood that what had been agreed with the franchisee was that he had to pay the costs as set out in the franchise agreement up to $250,000 plus GST. Even though Ms Ali understood that the words upper limit meant that the franchisee would not have to pay more than $250,000, she said she was not sure what would happen if the costs were less than $250,000. Later, Ms Ali accepted that if the actual costs were lower then the franchisee would only be charged the lower amount. 551 Then, importantly, Ms Ali accepted that what was happening was that the franchisee was to enter into a franchise agreement substantially on the standard terms except that there was to be a cap and for the listed items it was not going to be higher than the cap. It is not an understanding about an ability for Geowash to charge a lump sum price nor apply monies to the payment of a commission for effecting the sale of the franchise or to general operating costs and expenses of Geowash. 552 On 7 August 2014, Mr Cameron sent an email to Mr Verebes (copied to Ms Ali) in which he said a contribution of $66,500 being made to fit-out costs for a particular franchise included any management fees from Geowash 'managing the whole process of securing the permits, lease, coordinating project management and builder etc'. The email then said: 'As Geowash issues the stage invoices it shouldn't matter'. Without any particular explanation the reference to 'stage invoices' was consistent with the terms of the franchise agreement that allowed Geowash to invoice for Fit Out Costs in advance. 553 Further, this email does not concern the terms of the usual franchise agreement. It is dealing with a particular arrangement by which there is a commitment to provide a fit-out contribution which is to be calculated taking into account management fees of the kind discussed. The indication from Mr Cameron is that he is not concerned a great deal about specifying how the amount is calculated because it is Geowash that issues the invoices to the customer and therefore it will be making the calculation. What is significant for present purposes is that there is no suggestion that Geowash is invoicing for a lump sum price, or for amounts that do not form part of cost or is including a charge for a 20% commission. 554 After being taken to the above documents, Ms Ali stated that her instructions to Mr Verebes were to the effect that Geowash was going to invoice for the fit-out costs in stages in advance. However, as I have said, instructions of that kind would be expected to be reflected in the terms of the franchise agreement. Under the franchise agreement Geowash could request a payment on account of fit-out costs. The issues raised by the conduct of Ms Ali and Mr Cameron on behalf of Geowash are not whether it could invoice in advance by way of staged payments. Rather, the issues are whether the amounts of those invoices could be determined without regard to the likely amount of fit-out costs, whether they could treat the commission payments made by Geowash as costs and whether Geowash could claim an entitlement to payment of instalments of a purchase price as distinct from an amount representing actual costs of setting-up a franchise site. 555 Instructions of the kind described by Ms Ali would not result in any consideration by Mr Verebes as to whether Geowash could charge franchisees by stages based upon an up-front 'purchase price' and then retain those funds irrespective of the actual costs. Nor would they result in advice as to whether there could be charges for a sales commission of 20% or charges for management fees to Geowash that had not been separately and reasonably calculated. Even though privileged communications with Mr Verebes were relied upon, Mr Verebes was not called to give evidence and no explanation was proffered as to why he was not called. 556 Mr Cameron gave evidence to the effect that Mr Verebes knew that he would be receiving commissions when a franchise agreement was secured by Geowash and on that basis he believed that the disclosure document provided to franchisees was correct. I do not accept this evidence for the following reasons. First, it was not stated in the affidavit provided by Mr Cameron when he set out his evidence about legal advice. In that affidavit he referred to a practice of requesting costs of fit-out up front. He described those costs in terms that made no reference to commissions. Second, the evidence of Mr Cameron (which I have not accepted for reasons stated above) was to the effect that the payments were not commissions but were payments for work done by him in making arrangements to select, fit-out and set-up sites. He sought to characterise the commission payments as payment for work done after the sale was achieved. If that was true then there would be no reason why Geowash would be asking Mr Verebes whether commissions can be charged on sales and those commissions paid out of the staged payments from franchisees. This inconsistency in logic in the evidence given by Mr Cameron undermines the credibility of his evidence on this topic. 557 In the above circumstances, I do not accept the claims that legal advice was received by Geowash that was known to Ms Ali and Mr Cameron to the effect that the charging practices actually adopted by them when dealing with franchisees were in accordance with the franchise agreement or otherwise lawful.

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Part VI: Summary of findings concerning dealings by Geowash with its franchisees 558 I begin by noting that, with two qualifications (referred to below), the evidence as to the course of dealings by Geowash with its franchisees establishes that, for present purposes, the relevant aspects of the overall course of dealings was the same for each of the franchisees. 559 The evidence of both Ms Ali and Mr Cameron was that the approach whereby franchisees were charged staged payments for the fit-out and set-up costs was adopted for all Geowash franchisees. The same is the case for the payment of the commissions. There was no suggestion by the respondents that there was a process by which the staged payments were reconciled to the actual fit-out and set-up costs incurred by Geowash. There was no suggestion that there was anything particular about the way the fit-out and other set-up costs were charged to the franchisees who gave evidence compared to other franchisees. On the contrary, the approach adopted by Ms Ali and Mr Cameron in dealing with franchisees was said to reflect the same business practice for all franchisees. 560 Ms Ali and Mr Cameron both accepted that there were no records kept of actual time spent by them dealing with matters relating to a particular franchise. Commission payments of at least 20% were paid in respect of the staged payments. I say at least 20% because there is evidence that further payments were made to the master franchisees for Western Australia. Also, the evidence shows that considerable amounts were distributed to Ms Ali when staged payments were received from franchisees (at least in the earlier period of Geowash entering into franchise agreements). 561 Therefore, based upon that evidence and the respects in which there were consistencies between the manner in which Ms Ali, Mr Cameron and other Geowash personnel dealt with each of the seven franchisees who gave evidence, I am satisfied that general findings can be made concerning the matters in issue as to the nature of the dealings with most Geowash franchisees. I will deal with my overall findings as to those matters shortly. However, I first deal with the two qualifications to the general position. 562 The first qualification is that in the case of the South Fremantle site in Beaconsfield, there was an agreed amount to be paid of $250,000 plus GST. It was, in effect, an agreed purchase price. The franchise agreement that was signed did not record an arrangement of that kind. However, that was the nature of the dealings between the parties. The discussion between the parties was as to how much would be paid for a Geowash franchise to be operated from the South Fremantle site. There was also discussion about what would be delivered for that price, namely a site that was like the Magic Hand car wash on Canning Highway. There was no discussion about the price changing or depending upon ultimate cost. It was a specified price for a specified standard of site. 563 I note that the South Fremantle site was used by Geowash to assist in marketing its car wash franchises. The fact that it was set up as an initial example may explain why such an approach was adopted in dealing with the franchisee for that site. Subsequently, in dealings with other franchisees, various amounts were presented as the 'cost' that had been incurred at South Fremantle. Those statements were used to justify the likely cost that would be involved in establishing a car wash and café at other sites. 564 As I have noted, there is also evidence indicating a similar arrangement was contemplated for a Geowash site in Rockingham. 565 The second qualification is that in some but not all cases there was an agreed cap on the cost of establishing particular Geowash outlets. I note that the use of a cap has particular significance for those cases because it is contrary to any agreement being reached as to a price that was payable irrespective of the cost to Geowash. Rather, it indicates that there will be an amount to be charged based upon cost but Geowash is providing an assurance to the franchisee that the final charge will not exceed a specified amount determined by reference to the actual costs incurred. 566 Save for those two qualifications, I find that the course of dealings by Ms Ali and Mr Cameron (and others acting for Geowash) with the Geowash franchisees who gave evidence shared the following characteristics. Based upon the extent of the involvement of Ms Ali and Mr Cameron in dealings with particular franchisees, I also find that the fact that franchisees were being dealt with in the manner described below was known to each of them at the time. 567 The franchisees who gave evidence were typically unsophisticated when it came to owning and operating a business. This was a matter that would have been evident to each of Ms Ali and Mr Cameron in their dealings with the franchisees. The only franchisee who had experience in managing and owning a car wash was Mr Brar. However, his experience had been in a family business in India. There was no suggestion that it involved committing a large capital sum to buy the business or that he was familiar with the structure of a franchise business and matters that needed to be addressed in dealing with a franchisor. Ms Ali and Mr Cameron encouraged a number of franchisees to commit to an agreement on the basis that they could borrow considerable amounts in order to be able to invest in a Geowash franchise. The significance of that evidence for present purposes is that the communications by franchisees concerning those applications made clear that they were not familiar with preparing a business case or what was required to secure a business loan or the risks that may be involved. It was evidence that supported the overall finding that the particular franchisees were typically not experienced in business dealings. 568 It is not possible to make findings as to whether other franchisees were unsophisticated because no evidence was led concerning the business experience of other franchisees. 569 Otherwise, I make the following findings as to the course of dealings with the franchisees who gave evidence. 570 First, there was a discussion with each franchisee about what the cost would be to establish a franchise business. It has not been shown that the topic of the budget that the franchisee was willing to spend was a matter that was always instigated by Ms Ali or Mr Cameron or someone else acting for Geowash. It was a topic in which both parties were interested. The franchisees were told a likely cost to establish a franchise. The amounts were presented as being dependent upon the particular site that was ultimately chosen and the detail of the fit-out. There were also amounts that were presented in the Franchise Overview, the Franchisee FAQs and the Disclosure Document. There was some inconsistency between the information in the documents, particularly as to what it would cost to set up a franchise. During the discussions, it was Ms Ali or Mr Cameron who communicated a specific figure about the likely cost. 571 Second, a number of the franchisees were given a likely cost figure on the basis that it would be for a franchise that was like a Magic Hand franchise or the South Fremantle franchise in Beaconsfield. Even though the figures were provided using a similar reference point, franchisees were told different figures. This evidence indicates that the figures were being set by reference to matters other than expected cost. 572 Third, franchisees entered into franchise agreements on the basis of oral statements made by Geowash to the effect that a franchise could be provided for a specified amount. I do not accept the claim by the ACCC that there was a consistent correspondence between the specified amount and the amount of a budget figure advanced by the franchisee. There were instances where the specified amount was quite a bit more than the original budget and there was an expectation that finance could be obtained to meet the difference or the franchisee accepted the higher figure. In some cases, franchisees were told that the amount that would be paid would be capped at a particular amount. The capped amounts were not consistent. The lack of consistency provides support for an inference that the amounts reflected an assessment by Ms Ali and Mr Cameron of the willingness and capacity of a franchisee to pay (taking account of any borrowings) rather than any real and genuine assessment by Geowash of the expected costs for each franchisee. An inference of that kind is also supported by the absence of any evidence of any document indicating that an assessment was undertaken of the actual cost to establish a franchise outlet and the lack of records concerning expenditure for each site. Finally, the dealings with individual franchisees show that they were pressed to pay more and threatened with losing the opportunity to secure a site if they did not commit and pay the specified amount, conduct that was consistent with testing the capacity to pay of individual franchisees. In all the circumstances, I infer that the invoiced amounts for the staged payments were established by reference to an assessment undertaken by Ms Ali or Mr Cameron or both of them of the capacity of the particular franchisee to pay rather than any assessment of the likely cost to be incurred by Geowash in setting up a particular site for the franchisee. 573 Fourth, although the term 'price' was used by Geowash in some promotional material and in some other communications with franchisees, the term was used in a context where it indicated an amount to be paid by the franchisee to meet the cost of establishing the site. Therefore the term 'purchase price', in context, was presented by Ms Ali, Mr Cameron and other Geowash personnel as being an amount that depended upon the actual cost incurred by Geowash to establish the site. Apart from the dealings for South Fremantle and Rockingham (a site the subject of some documentary evidence but no oral evidence from any person associated with the franchisee), there was no evidence that Geowash offered franchisees a franchise for a specified price or that a purchase price (in the usual sense of that term) was agreed by Geowash with a franchisee. The consistent justification for the specified amount presented by Geowash to each franchisee was the cost that would be incurred by Geowash to fit-out and set-up a site and the need for the franchisee to pay that cost. 574 Fifth, the information provided to franchisees contained a general description of the type of costs that would be incurred and referred to external parties such as town planners, architects and builders. There was no evidence of Ms Ali or Mr Cameron telling franchisees that the costs would include charges for management time spent by Geowash personnel or the amount of commissions for achieving the sale of each franchise. 575 Sixth, the discussions with each franchisee prior to entry into a franchise agreement resulted in the identification of a particular figure (or a narrow range) as to what it would cost for a car wash to be established. It was not an agreed price. It was not stated in the formal documents. It was simply an amount that the franchisee was willing to pay and an amount that Geowash presented to the franchisee as an amount that would be required in order to meet the costs of establishing a car wash site. This specified amount was not an amount determined by reference to any detailed costing undertaken by Geowash. 576 Seventh, after a franchise agreement was made and there were ongoing dealings about the establishment of the car wash at the particular franchise site, inquiries from franchisees for greater detail about costs were met with the same type of response, namely: (1) the costs being incurred by Geowash were described in general terms; (2) the instalment invoices were justified to franchisees on the basis that they reflected costs that were actually being incurred by Geowash; and (3) no details of estimated or actual costs for each site were ever provided. 577 Eighth, Geowash invoiced franchisees in two instalments (or staged payments) based upon the specified amount that had been discussed and did so irrespective of the level of actual costs incurred by Geowash. On occasions, Geowash agreed to arrangements by which a staged payment was paid in instalments. The first payment was invoiced as soon as the site for the franchise outlet was agreed which was well before any material costs would actually be incurred by Geowash. The second payment was invoiced before the fit-out work commenced. Before they entered into the franchise agreement, each franchisee was told that they would be invoiced in that manner. 578 Ninth, in some cases Geowash presented franchisees with invoices that resulted in charging above the specified amount that had been the subject of discussions before the parties entered into the franchise agreement. This conduct by Geowash was inconsistent with an arrangement whereby there was a price that was payable. It was conduct that reflected the nature of the actual arrangement communicated by Geowash to franchisees, namely that the amount to be paid reflected actual cost. So, when it suited Geowash to do so, it claimed more based upon an asserted liability to meet actual costs. It is not necessary to make findings as to whether the additional invoices reflected actual costs that were greater than the amount specified at the outset. What is significant for present purposes is that Geowash itself did not treat the instalments invoiced to franchisees as if they were an agreed purchase price (as distinct from a payment on account of costs to be incurred). 579 Tenth, there was no evidence of Geowash providing a reconciliation of costs actually incurred with instalment payments made by particular franchisees, despite evidence of occasions where they were requested. Instead, Geowash treated the process as one in which it could charge the full specified amount (and press for more in a number of instances) and apply those monies how it saw fit. 580 Eleventh, Geowash paid commissions to Ms Ali and Mr Cameron that were at least 20% of the staged payments. The payments were sales commissions for securing a franchise agreement with a franchisee. The payments were not for management of the design or fit-out of the Geowash outlet for the franchisee. 581 Twelfth, Geowash treated the staged payments as general revenue of Geowash. There was no accounting by which the payments were treated as being on account of actual costs to be incurred in the design, fit-out and set-up of the franchise outlet. The funds were applied to meet the general costs and expenses of Geowash which included the costs that were incurred in setting up particular sites, but were not confined to them. 582 By dealing with franchisees in the above way, Geowash established an amount that the franchisee was willing to pay and presented that specified amount as the actual cost to fit-out and set-up a Geowash site when in fact Ms Ali and Mr Cameron intended to use the funds to cover the payment of a series of commissions that had been agreed between them and to retain as profit any surplus that could be earned (after paying both commissions and costs) by charging the specified amount to the franchisee. However, this was both not disclosed to any franchisee and was contrary to the actual dealings with individual franchisees, particularly the terms of the Disclosure Document and the franchise agreement. 583 As to the alleged failure to deliver a Geowash outlet to franchisees, the ACCC did not establish that Geowash, Ms Ali and Mr Cameron dealt with franchisees on the basis that they would not be provided with a franchise site. Steps were taken to try and deliver a site for each franchisee. Under the terms of the franchise agreement there was an extended period in which to identify a site. There was no consistency as to the outcomes concerning the delivery of the site. The reasons why sites were not delivered varied from franchisee to franchisee. The ACCC has not established a system of dealings with franchisees by which Geowash did not plan to establish sites or was unconcerned whether there would be funds to establish sites. It is important to bear in mind that the case advanced by the ACCC did not allege that the failure to deliver a site was caused by conduct of a particular kind on the part of Geowash. The ACCC made no case that depended upon the particular reason why a site was not established for a particular franchisee. Rather, the nature of the case alleged was that there was a course of conduct or system in dealing with all franchisees that included a failure to deliver Geowash outlets for most franchisees. That aspect of the claim has not been established. 584 Further, there was no complaint, in terms, that Geowash should have accounted for the funds that it received or reimbursed monies to franchisees when a site was not identified and delivered within a specific period of time. The allegations focussed upon the way franchisees were charged and what Geowash did with the money, particularly its application of funds to pay commissions and meet general operating costs and expenses rather than use all of the staged payments to meet the costs of setting up a franchise outlet for each franchisee.

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Expert report of Ms Yan 586 Ms Jennifer Yan of Ferrier Hodgson undertook a forensic review of the bank records and provided an expert report based upon her experience and expertise in analysing financial information. Ms Yan impressed as a thorough and careful witness who was particular and precise as to the extent to which conclusions may be reached from her analysis of the bank records. The analysis that she undertook was limited by the description on the bank statements to characterise the transaction. 587 Ms Yan provided a report which sorted the amounts in the bank statements into different categories based upon their descriptions. She also undertook an analysis of the flow of funds between bank accounts, including those of Ms Ali and of Mr Cameron and his wife. The analysis of the flow of funds depended upon the account number information, the amounts and dates for each entry in the bank statement. 588 The analysis by Ms Yan was undertaken for the period from 1 January 2012 until the last date of the bank statements. Some bank accounts only operated for part of the period. Others continued until the administration of Geowash. There was no suggestion that there were other bank accounts that should have been included. In effect the analysis was from 2012 until 2016. 589 Amounts paid by Geowash and its related entities HTN and Geowash Supplies (other than inter and intra entity transactions) were divided into six categories: (a) for the benefit of franchisees ($2,380,271); (b) operating expenses of Geowash and its related entities ($2,845,226); (c) potential operating expenses ($733,292); (d) personal expenses ($77,296); (e) commissions ($2,646,254); and (f) unknown ($1,052,976). 590 The conclusions that might be drawn from the analysis based upon descriptions in the bank records are limited by those descriptions. However, in the case of payments made to Ms Ali and Mr Cameron and their associated parties they are based on a contemporaneous description allocated when those payments were made. The description of many payments as commissions is significant. 591 I have found separately that the commission payments made by Geowash were properly sales commissions and were not determined on the basis of work done for franchisees. Further they were payments of a kind that Geowash was not entitled under the terms of its franchise agreements to treat as expenses that could be met out of the staged payments received from franchisees. Yet that is what occurred. Although there was evidence that Ms Ali undertook some other business activities and received some payments in respect of those activities, the evidence did not show that substantial commissions were to be paid as a result of those other activities. I find that a reasonable degree of confidence can be placed in the use of the description commissions as indicating payments that were mostly made for effecting sales of franchises. Therefore, the analysis by Ms Yan shows that a large amount of the payments made by Geowash were for commissions. 592 Likewise, amounts that could be identified from their descriptions as personal expenses are likely to be reasonably accurate (bearing in mind the approach of including in a separate category amounts where there was uncertainty). They show that a considerable amount was paid to meet expenses that were not business expenses. The cross-examination of Ms Ali identified quite a number of these items. Despite Ms Ali's attempts to characterise some of those items as business expenses, I do not accept that evidence as credible. 593 Otherwise, having regard to its limitations I do not rely upon Ms Yan's analysis as a basis for drawing a conclusion as to the extent to which amounts received by franchisees were applied to fit-out and set-up franchises. As to that aspect, I have found that there was no means by which Geowash could ensure that the amounts invoiced to franchisees by way of staged payments corresponded to the actual costs incurred even though the staged payments (described as instalments of a 'purchase price') were justified to franchisees on the basis that they represented charges for actual costs. For the purposes of these proceedings it is not necessary to undertake a precise calculation of the extent to which there was a divergence. On the basis of all the evidence, I find that there was no correspondence between the staged payments received from franchisees and the actual costs of fit-out and set-up of the franchise outlets as expended by Geowash. Instead, Ms Ali and Mr Cameron established an amount that would be invoiced to franchisees and then paid themselves commissions based on those amounts and did not otherwise track or account for the expenditure of those funds on the particular fit-out or set-up of individual franchises. 594 I accept the analysis of the flow of funds undertaken by Ms Yan. It showed that of the funds received into the various bank accounts over the period 2012 to 2016, Ms Ali and Mr Cameron and his wife were the ultimate beneficiaries of a considerable part of those funds. Ms Ali received and retained $1,766,305. Mr Cameron received and retained $199,631. Mrs Cameron received and retained $1,187,098. Of the funds received by Mrs Cameron a considerable part passed through Aleja Pty Ltd the trustee of a trust that received commission income under the terms of Mr Cameron's engagement by Geowash.

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Timing of commission payments 598 The following findings are taken principally from the summary of the evidence as to the demands made by Geowash of franchisees for payment of monies and the withdrawal of amounts described as commissions in the banks statements of Geowash that was produced by the ACCC as a schedule to the findings that it invited the Court to make. Some additional information is taken from the bank statements of Geowash referenced in the summary. My findings as to these matters are set out below. 599 As to Mr Singh and Domain car park: (1) on 28 March 2014, an amount of $107,250 was received from the franchisee; (2) immediately prior to the deposit being received the Geowash bank account balance was $7,805.21; (3) on 2 April 2018, commission payments were made of $50,000 to Ms Ali and $30,000 to Mr Cameron; (4) after the payment to Mr Cameron the bank account balance was $24,183.68 600 As to Mr Chhina and South Fremantle: (1) on 20 and 21 March 2014 amounts totalling $118,250 were received from the franchisee; (2) the Geowash bank balance before these receipts was $2,477.45; (3) on 21 March 2014 commission payments were made of $27,500 to Mr Cameron and $57,500 to Ms Ali; (4) the bank balance after the payments was $14,008.22. 601 As to Mr Brar and Northbridge: (1) on 12 and 13 August 2014, amounts totalling $50,000 were received from the franchisee; (2) the bank balance before these receipts was $169,984.59; (3) on 18 August 2014 commission payments were made of $40,000 each to Mr Cameron and Ms Ali; (4) the bank balance after the payments was $154,606.37. 602 As to Mr Khalid and Palmyra: (1) on 11 September 2014, an amount of $33,500 was received from the franchisee (being the franchise fee on which there was to be a 40% commission); (2) the Geowash bank balance before the receipt was $77,171.98; (3) on 16 September 2014 commission payments were made of $50,000 each to Mr Cameron and Ms Ali; (4) the bank balance after these payments was $7,132.04; (5) on 25 and 26 September 2014, amounts totalling $69,000 were received from the franchisee; (6) the bank balance before these receipts was $65,264.06; (7) on 6 October 2014, an amount of $50,000 was withdrawn; (8) on 7 October 2014, commission payments were made to each of Mr Cameron and Ms Ali of $10,000; (9) the bank balance after these further payments was $111,061.03; (10) between 25 September 2014 and 7 October 2014, Geowash received 8 separate deposits totalling $105,500 with descriptions indicating that they were from other franchisees; (11) on 8 October 2014, an amount of $74,000 was withdrawn leaving a balance of $34,211.81; (12) there is no evidence as to the purpose of the withdrawals but they do indicate that most of the funds received from franchisees at this time were paid out of the Geowash account. 603 As to Mr Kalyan and East Perth: (1) on 25 February 2015, an amount of $143,000 was received from the franchisee; (2) the Geowash bank balance before the receipt was $985.16; (3) on the same day commission payments were made of $50,000 each to Mr Cameron and Ms Ali; (4) the bank balance after the payments was $3,365.16. 604 As to Mr Kumar and Baldivis: (1) on 9 and 10 April amounts totalling $80,000 were received from the franchisee; (2) the Geowash bank balance before receipt was $108,317.98; (3) on 10 April 2015 commission payments of $54,000 were made to each of Mr Cameron and Ms Ali; (4) the bank balance after the payments was $74,868.64. 605 Ms Ali gave evidence to the effect that the timing of the commission payments was because payments were made to Mr Cameron and to herself when cash flow permitted. She maintained that the payments were for design and project management services provided for particular franchisees (evidence that I have rejected). The evidence of the bank balance levels is telling. It shows that when Geowash was receiving monies that, even on the account of Ms Ali and Mr Cameron were to be applied to meet costs associated with fit-out and set-up of Geowash outlets, the bank account of Geowash was being depleted of funds by making payments to each of Ms Ali and Mr Cameron. The bank records to which I have referred show that on many occasions the Geowash bank account was left with little money to expend on actual fit-out and set-up costs. The monies were received well before such works were to be undertaken yet very little of those funds were retained by Geowash for that purpose. Consequently, Geowash could only secure the necessary funds by monies obtained from further franchisees or by further injections of capital. The lack of funds placed in jeopardy the completion of the fit-out and set-up of the franchise when the time came for those works to be undertaken. 606 The evidence of the flow of funds strongly supports the case advanced by the ACCC that monies obtained by Geowash from franchisees were treated as Geowash's own funds and applied to pay commissions to Ms Ali and Mr Cameron and pay general expenses. The result was the funds were not available to establish the Geowash outlets and the ability of Geowash to deliver car wash outlets as represented was compromised with the likely consequence that such outlets could not be delivered or would be inferior in standard because of the depleted funds.

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Ms Ali's evidence about expenditure on individual franchisees 607 Ms Ali produced a document entitled 'Geowash Site Summary'. It listed the name and site of each franchisee, the Geowash income from the site and an amount said to be the expenditure for the site. In respect of the sites the subject of evidence from the seven franchisee witnesses, the information in Ms Ali's summary was as follows: (1) for Mr Singh and Domain car park: income $221,750, expenditure $105,369.29; (2) for Mr Chhina and South Fremantle: income $275,000, expenditure $341,539.27; (3) for Mr Brar and Northbridge: income $115,500, expenditure $24,500; (4) for Mr Khalid and Palmyra: income $170,500, expenditure $103,648.96; (5) for Mr Kumar and Baldivis: income $181,500, expenditure $43,120.46; (6) for Mr Kalyan and East Perth: income $357,500, expenditure $302,174.43; (7) for Mr Bhaur and Wanneroo: income $449,500, expenditure $368,469.46. 608 I do not accept the evidence of expenditure on individual franchisees. As I have noted, Geowash did not keep records by which expenditure was allocated to individual franchisees. The figures were a reconstruction based upon general entries in ledger accounts maintained for all Geowash expenses. Some costs had been allocated based on the descriptions. In other cases, Ms Ali had simply allocated amounts based upon her alleged recollection of what the expenditure related to. Undertaking such a task a number of years after the relevant events could not produce figures in which confidence might be reposed. Having regard to Ms Ali's other evidence I find that the amounts are likely to be overstated and represent an exaggeration of what was spent directly on the set-up of each franchise. Given the findings I have made as to the lack of credibility of the evidence of Ms Ali, I do not accept this evidence. 609 However, even if the expenditure figures were accepted, they demonstrate that for most cases there is a significant shortfall between actual costs said to have been expended and the amounts received from franchisees. Ms Ali sought to explain the differential, in effect, on the basis that there was considerable work done by Mr Cameron and herself for which commission payments were made, and there were other Geowash costs which had, in effect, been expended on the individual franchisees. I have already explained why I do not accept that considerable work was done by Ms Ali and Mr Cameron to arrange and supervise the design, fit-out and set-up of each franchise. Further, the commission payments were for arranging the sale of each franchise not for undertaking project management. 610 Otherwise, the only case where Ms Ali claims that more was spent by Geowash than it received is South Fremantle. It is to be remembered that in communications with franchisees they were told quite varied amounts as to what it would cost to establish a franchise. They were told those amounts before a site had been selected. In their evidence Ms Ali and Mr Cameron sought to justify those amounts on the basis of what it had cost to establish South Fremantle. As I have noted, in the context of that evidence it is odd that the costs said to have been incurred for that site were well in excess of the amounts communicated by Ms Ali and Mr Cameron to a number of franchisees. 611 Nevertheless, Ms Ali produced some information which was advanced to support the figure of about $341,000 in the Geowash Site Summary in the case of South Fremantle. Those figures included GST of $25,000 (when the amounts discussed with franchisees were exclusive of GST); legal fees of $27,012; commissions to master franchisees of $15,400; travelling cost for management of $5,000; head office time and set up cost of $10,000; website, marketing campaign, research costs of $5,000; and miscellaneous payments of $9,177. The actual building and construction cost was said to have been a total of $203,152 including project management of $9,350. So, on the face of the figures provided they do not justify actual expenditure of fit-out and set-up over and above the amount received from the franchisee.

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General principles 612 The claim made by the ACCC as to the Revenue, Profit and Affiliation Representations is that they were directed to prospective franchisees in general by publishing them on the website of Geowash. It is not a claim that the representations were directed to particular persons or franchisees. The claim made as to the Charging Representation is based upon allegations as to what occurred in dealings with individual franchisees who entered into agreements with Geowash. 613 The distinction is an important one in the context of a claim of misleading or deceptive conduct. Where a claim is made that conduct was directed at a section of the public (in this case, prospective franchisees), it is necessary to isolate by some criterion a representative member of that class. Whether the conduct is misleading or deceptive is to be evaluated by reference to the ordinary or reasonable members of that class. As to these matters, see Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [100]-[103]. 614 Further, the effect or likely effect of the conduct is to be evaluated in context having regard to the circumstances in which the representational conduct is said to have occurred. Particular statements must not be divorced from the circumstances in which they were made, including circumstances that may qualify the character of the representations: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [39]. 615 Therefore, evidence as to the type of person who was likely to be a potential Geowash franchisee is of significance. Relevant matters may include the extent to which they may be expected to be experienced in business (particularly key aspects of the proposed carwash franchise business), their education, their facility with English, whether they have access to independent advice or assistance and whether they are familiar with formal legal documents. In reaching a view as to these matters, it will be relevant to consider the nature and extent of investment that was invited by Geowash and the type of people who might be expected to respond to marketing of the franchises by Geowash. 616 Such public representation cases must be distinguished from those cases where the conduct complained of was directed at a particular individual or entity. In such cases, the claim to relief of that kind by a particular party depends upon analysing the conduct of the party engaging in the conduct in relation to the claimant alone: Butcher v Lachlan Elder Realty at [37]. 617 Both in the case of representations to the public and representations in the course of dealings with particular parties, conduct is misleading or deceptive or likely to mislead or deceive if it has a tendency to lead into error. That is to say there must be a sufficient causal link between the conduct and error on the part of persons exposed to it: Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 at [39]. 618 Where damages are claimed, there is a separate causal requirement to be met, namely that loss or damage was suffered by the misleading or deceptive conduct. 619 The distinction between conduct having a tendency to lead into error (the first causation inquiry) and conduct that has resulted in loss or damage (the second causation inquiry) is not always maintained, but it is important. The question whether there has been a contravention of the statutory prohibition against engaging in misleading or deceptive conduct is a different question to whether loss or damage has been suffered by contravening conduct such that the Court will made an order for compensation. It is logically anterior: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [24]. 620 In determining for the purposes of answering the anterior question whether particular conduct has a tendency to lead into error, those who fail to take reasonable care for their own interests are to be excluded because the statutory provision was not enacted for their benefit: TPG Internet at [39]. 621 However, identifying what will amount to a failure to take reasonable care requires a contextual inquiry. Where the conduct in a particular case involves making statements or providing information to people who may be expected not to scrutinise it closely or only absorb the general thrust then members of the target audience may not absorb the detail yet not be characterised as having failed to take reasonable care: TPG Internet at [47]. 622 There are various statements in the cases concerning whether the views of the not so intelligent, the extremely stupid or unusually gullible or those who are guided by misconceptions are to be disregarded when it comes to evaluating whether particular conduct has a tendency to lead those who make up the audience for the conduct into error. The evaluation as to whether conduct has a tendency to lead into error must be undertaken objectively having regard to the characteristics of a reasonable member of the class of persons to whom the conduct is in fact directed (irrespective of the intentions of the party engaging in the conduct as to who may comprise the audience). This is the case both where the audience is the public in general and where the audience is a particular identifiable person and therefore a class of one. 623 If the audience for the conduct in issue comprises the less educated, the gullible or those prone to misconceptions then a determination as to whether the conduct is misleading or deceptive is to be undertaken in that context. The legislation does not afford protection for a member of the audience who responds unreasonably, but unreasonableness is to be evaluated having regard to the characteristics of the audience members in the particular case. 624 Further, to the extent that the claim by the ACCC is that the representations concern future matters that are to be falsified (with the assistance of what is now s 4 of the ACL) on the basis that the person did not have reasonable grounds for the making of the representation then attention is to be directed to the grounds at the time the representation was made: McGrath; in the matter of Pan Pharmaceuticals Ltd (in liq) v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230 at [146]. 625 In North East Equity Pty Ltd v Proud Nominees Pty Ltd [2012] FCAFC 1 at [28] it was held that the statutory predecessor to s 4 of the ACL (being former s 51A of the CCA), imposed an evidential burden on a respondent to adduce evidence on the issue of whether there were reasonable grounds for making a representation and that no persuasive burden (onus) fell on the respondent to prove that it had reasonable grounds. Section 4 of the ACL has been enacted in terms that maintain the form of providing that a person is taken not to have had reasonable grounds for making a representation unless evidence is adduced to the contrary: see s 4(2). 626 Whether there has been misleading or deceptive conduct by a corporation is a question of fact that requires a contextual inquiry. The conduct must be assessed against the background of all surrounding circumstances: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177, approved of in Campomar Sociedad, Limitada v Nike International Limited at [100]. 'It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the course of a single course of conduct must be deduced from the whole course of the conduct': Butcher v Lachlan Elder Realty at [109] quoted with approval in Campbell v Backoffice Investments at [102].

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The revenue and profit representations 627 Between 21 May 2015 and 13 May 2016, the Geowash website contained certain financial information under the banner 'Research Geowash' and the heading 'How much money can I make'. The information was displayed in the following way: GEOWASH HAND CAR WASH & DETAILING CAFÉ The following statement represents the average periodic sales and certain critical costs during our recent accounting year from April 15, 2014 to May 14 2015, for one of leading sites that operated throughout during this time. All of our sites are operated by franchisees. Because we monitor financial performance on regular basis, the following presentation is the example average for a 28 day, four week period. SALES AMOUNT % Car Wash $68,626 98% Café $1,590 2% TOTAL SALES $70,216 100% LESS: EXPENSES Electricity $1,200 3% Water $500 1% Telephone $115 0% Rent $9,650 24% Car Wash Chemicals $900 2% Café items purchased $1,000 3% Wages $26,412 66% TOTAL EXPENSES $39,777 100% AVERAGE 4 WEEK GROSS PROFIT AFTER COSTS $30,439 43% Please note that this statement does not include the following items: • Other operating expense items, the most critical of which are: advertising and promotional expenses; complementary meals or discounts; credit card processing and bank charges; other operating supplies; and miscellaneous costs. • Other business expenses or allowances, such as costs of borrowing funds; tax liabilities; or allowances for depreciation or amortization. • Costs associated with franchise operations, such as royalties and marketing fees. 628 The key aspects for present purposes are: (1) the financial information is described as representing 'the average periodic sales and certain critical costs during our recent accounting year from April 15, 2014 to May 14 2015, for one of leading sites that operated throughout … this time'; and (2) the amount of $30,439 is described as 'average 4-week gross profit after costs'. 629 The statements on the website are presented to the public at large. They form part of a website in which there is information presented to potential Geowash franchisees. The franchise is for a hand car wash. By the relevant period Geowash (through Ms Ali and Mr Cameron) are aware that those who were interested and are responding to the website are not sophisticated or experienced in business. Information concerning average returns that might be earned by a franchisee concern quantifiable financial data. For the audience to whom they are directed, they create the impression that the information is accurate and has a proper basis. 630 The figures were based upon actual figures for one franchise, namely the Osborne Park Geowash franchise for the period 15 April 2015 to 14 May 2015. Those figures were not representative of monthly trading. They were not an average. There was no suggestion that they had any meaningful connection to an assessment of average earnings for Geowash franchisees in general, whether 'leading' or otherwise. The figures were presented under a heading 'How much money can I make'. In that context, they conveyed the impression that the average earnings as presented contained accurate financial information that indicated what an average leading Geowash outlet might be expected to earn by way of revenue and profit each month. Plainly, the figures were not of that character. 631 I reject the submission that the statements about average revenue and profits were commendatory puffery. 632 I also reject the submission that the use of the word 'average' was not a material particular for the purposes of s 37(2) of the ACL. The key aspect of the representation is that the figures are average figures rather than an isolated monthly result. It is the presentation of the figures as average monthly figures that gives them relevance to the heading posing the query as to how much money a franchisee might make. The fact that the figures may be an actual monthly result for a single month for one franchisee is not to the point. The material aspect of the information is its presentation as monthly average figures. 633 Reliance was also placed by the ACCC upon s 4 of the ACL. Aside for the fact that the figures were said to represent actual trading figures for the Osborne Park outlet for the sixth months that the outlet had been trading, there was no attempt to justify the figures by reference to any information held by Geowash concerning trading by franchisees in general. Ms Ali accepted that she had caused the information to be placed on the website and that it was the information from a single month's trading for the Osborne Park franchise that had only been trading for six months. As a director she had authority to act on behalf of Geowash. 634 In those circumstances, the claims by the ACCC concerning the contravention of s 18 and s 37(2) of the ACL by engaging in the conduct that involved the making of the revenue representation and the profit representation by Geowash should be upheld. They were representations as to what the actual average monthly revenue and profit was for a leading franchise. In fact, the figures were not of that character. Further, they were presented as a basis upon which a view might be formed as to what a franchisee might earn. Having regard to the nature of the actual information which formed the basis for the statements made it has been affirmatively demonstrated that there were no reasonable grounds for the representations made insofar as they were with respect to future matters. There is no need for the ACCC to rely upon s 4 of the ACL to support that conclusion. 635 I deal with the claims that Ms Ali and Mr Cameron were accessories to that contravention separately below.

[45]

The affiliation representation 636 At the 'Home' location on the Geowash website there was a heading 'Welcome to Geowash hand car wash & café'. It described 'Our Services' and 'Our clients'. Underneath the heading 'Our Clients' were the logos for Nissan, Kia, Renault, Audi, Emirates, Shell, Hertz, Holden, Ikea and Thrifty, amongst others. The website was directed towards encouraging potential franchisees to consider entering into a franchise agreement with Geowash. Some of the other brands were for businesses in Australia, such as Park Beach Plaza, a shopping centre in Coffs Harbour and Caneland Central Lend Lease, a shopping centre in Queensland. In those circumstances, the content of the website represented that Geowash itself had a commercial affiliation with each of the brands of a kind that meant they were clients of Geowash in Australia. 637 Geowash had no commercial relationship or affiliation with the businesses that traded using those logos. This was a fact formally admitted by counsel for Ms Ali and Mr Cameron in closing submissions. Therefore, the representation conveyed by the information on the website about clients of Geowash was untrue. 638 Ms Ali and Mr Cameron relied upon claims that Geowash International did have such affiliations. Whether Geowash International had such an affiliation was not to the point. The publication on the Geowash website created the impression that Geowash itself had a commercial affiliation with businesses operating under each of the logos depicted on the website. Any association with Geowash International would be meaningless unless it translated into an actual association with Geowash of a kind that would mean that there could be expected to be more car wash business for individual franchisees. The impression created by the information published on the website for the audience of prospective franchisees reading the site was that there was an association with Geowash of that kind. That was a false impression. 639 Therefore, the alleged contravention of s 29(1)(h) of the ACL by Geowash has been established. 640 I deal with the claims that Ms Ali and Mr Cameron were accessories to that contravention separately below.

[46]

The charging representation 641 Unlike the claims concerning the revenue, profit and affiliation representations where the conduct was directed at the public at large, the claim concerning the charging representation concerns dealings with individual franchisees. It was not said that there was a confined class of persons to whom the relevant conduct was directed. Rather, the charging representation was alleged to arise from the interactions between Geowash and each franchisee. There was said to be common characteristics in respect of those dealings. Further, the evidence of the dealings in relation to seven of the franchises was advanced to support a claim that dealings with all franchisees had followed the same course. As I have noted, the evidence of Ms Ali and Mr Cameron concerning the manner of charging was to the effect that there was a common way in which Geowash dealt with franchisees concerning charges. However, despite this evidence concerning common characteristics of the dealings with each franchisee, for reasons I have given, in cases where the misleading or deceptive conduct is said to arise from dealings with a particular party then it is necessary to consider the conduct in the context of the overall dealings with the particular franchisee. It is important to bear this aspect in mind in considering the charging representation claim. 642 For reasons I have given, it has been established that before they entered into a franchise agreement substantially the same matters were communicated to each of the 18 franchisees concerning the charges to be made by Geowash. The franchisees were told that they would be charged by staged payments being 50% at the time that a site was identified and a further 50% when work commenced on the site. Although this was described as a purchase price, in the context of the evidence of the dealings with the seven franchisees, save for the case of the South Fremantle site, it was not presented as a fixed amount. Rather, it was represented as a budgeted amount that would provide sufficient funds to meet the actual costs to fit-out and set-up a site of the kind described to the franchisee. 643 Each franchisee was given a Disclosure Document and the franchise agreement. Those documents described charges for fit-out and set-up based upon actual costs incurred for the particular franchise site. There was no provision within those costs for the commission payments that were made to Ms Ali and Mr Cameron or for payment of Geowash's general operating costs and expenses. The Disclosure Document was required to be provided in order to inform franchisees of various matters relating to the franchise, including what they would be charged. The franchise agreement was a document that was to record the obligations of the parties, including what the franchisee was obliged to pay. I am satisfied that in the usual course of events those documents when provided to a franchisee would represent to the franchisee that Geowash would charge for the establishment of the franchise site in the manner set out in those documents. 644 Save for those instances where there was agreement that a fixed amount would be paid as a purchase price, the statements made to franchisees about staged payments did not detract from the above conclusion. In context, the description of the staged payments were statements about how franchisees would be invoiced on account of the costs of the kind described in the Disclosure Document and the franchise agreement. Mainly, they were costs that had to be met by the franchisee in order for the franchise outlet to be set-up. The franchise agreement provided for the actual costs of fit-out to be invoiced in advance. Invoicing by staged payments was consistent with such an approach. 645 There was evidence to the effect that for the South Fremantle site and the site in Rockingham a fixed price was agreed. Otherwise, there was no evidence led to indicate that there was any different or unusual course followed for the other sites that meant that a different position as to costs was represented to a particular franchisee. Therefore, based on the evidence of the usual practice I find that for the 16 franchisees other than South Fremantle and Rockingham a representation was made by Geowash to each franchisee that it would charge according to the terms of the franchise agreement. In particular, charges for the design, fit-out and set-up of the particular franchise site would reflect the actual costs incurred by Geowash. Relevantly, for present purposes, that representation would be misleading if the intention of Geowash at that time was to charge for the costs of commissions incurred by Geowash and for its general operating costs and expenses being costs that could not be charged to a franchisee under the agreement. 646 I am satisfied on the evidence that the intention of Geowash (by Ms Ali and Mr Cameron) at all times was to pay commissions and general operating costs and expenses out of the staged payments that it received from franchisees. That is the practice that was followed. Therefore, in that respect and to that extent, there was misleading and deceptive conduct by Geowash concerning the charges to franchisees. 647 Having regard to the nature of the conduct alleged and the evidence from Ms Ali and Mr Cameron to the effect that the same approach was adopted for all franchisees when dealing with the manner of charging franchisees because that was the business model of Geowash, I am satisfied to the requisite standard that the approach as to charging had a tendency to lead any franchisee dealing with Geowash into error. Put another way, unless there was a departure from the business model (such as where a fixed price was agreed) the particular circumstances of each franchisee, the level of commercial sophistication of each franchisee and other conduct forming part of the dealings with each franchisee would not detract from the tendency for franchisees to be misled as to the nature of the costs they were being charged. The conduct was likely to cause franchisees to believe that they were to be charged for actual fit-out and set-up costs when, in fact, they were to be charged an amount that included substantial sales commissions and a margin which was to be applied to meet general costs and expenses of Geowash (with the possibility of a surplus to be retained as profit to Geowash). 648 A submission was advanced for Ms Ali and Mr Cameron to the effect that particular franchisees did not rely upon the 'technical' language of the Disclosure Document and the franchise agreement but rather relied upon the statements that there would be staged payments of a purchase price. However, that submission assumed, contrary to the facts I have found, that the impression created for franchisees by documents such as the Franchisee Overview and the Franchisee FAQs was that there would be a price charged in two instalments irrespective of the actual cost and that Geowash could apply those instalments how it saw fit. 649 Further, whether particular franchisees in fact relied upon the contents of the Disclosure Document or the franchise agreement when deciding whether to enter into a franchise agreement is not relevant when determining whether there has been misleading or deceptive conduct. Actual reliance is only relevant to the remedy that might be granted to a particular party who seeks relief such as damages or orders to the effect that the agreement could not be enforced or could only be enforced if it was varied in some way. In determining whether there has been a contravention by Geowash, it is necessary to undertake an objective assessment as to whether the conduct had a tendency to lead the particular franchisee into error. Submissions for Ms Ali and Mr Cameron to the effect that it was relevant to consider whether particular franchisees were actually misled in any way were misconceived. As I have found, the conduct of Geowash, by Ms Ali and Mr Cameron, in dealing with each franchisee as to the charges for design, fit-out and set-up was to create the impression that it was the intention to charge in the manner set out in the Disclosure Document and the franchise agreement which was for such charges to be made as to actual costs. In fact, the intention of Geowash at the time, through Ms Ali and Mr Cameron, was to charge amounts that would be applied to sales commissions and general costs. Conduct of that kind had the tendency to lead each franchisee into error. 650 It was also submitted, in effect, that the amounts paid by way of commissions were for project management expenses of a kind that was included in the definition of Fit Out Costs in the franchise agreement and therefore there was no misleading conduct because an intention to pay the commissions was in accordance with the franchise agreement. I have found that the commissions were not paid for undertaking work of that kind and therefore that argument must be rejected. 651 Finally, it was submitted that the Disclosure Documents and the franchise agreements were silent as to how the franchisees would be invoiced. Therefore, those documents contained no representation as to how the franchisees would be invoiced and the case alleged by the ACCC was about invoicing. I do not accept that the case as advanced by the ACCC concerned the manner in which the franchisees would be invoiced. Rather, it was a claim that those documents represented to franchisees that they would be charged in the manner set out in those documents. The case as opened focussed upon the absence of any provision in the franchise agreement for franchisees to be charged for commission payments to Geowash staff or for Geowash's general operating costs and expenses. The misleading character of the conduct was alleged to concern the type of costs, not the manner of invoicing.

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Alleged representation as to future matters 652 The ACCC advanced an alternative claim that by its dealings with franchisees in relation to charging, Geowash made a representation as to a future matter, namely the way Geowash would charge. The dealings with franchisees about the costs to be charged were not predictions or opinions or assessments as to what was likely to occur in the future. They were statements as to the way Geowash intended to charge. Where, as here, the subject matter of the representations concerns matters that are within the control of the representing party because they concern what it will do in the future and there is no real uncertainty as to whether the party will be able to do what it says, then usually conduct of that kind will create an impression about the present intention of the representing party as to what it will do in the future. It is not a statement of a kind that is providing an assurance that there are reasonable grounds as to whether the party is likely to be able to do what is represented concerning the party's own future actions. There is no uncertainty or risk as to that ability that is present as part of the context of the dealings between the parties. Rather, it is a representation as to a present state of affairs, namely what Geowash itself presently intends to do in the future. It is a reassurance about the level of present commitment to undertaking future actions or steps. In context, statements of that kind are not properly characterised as representations as to a future matter. They are not to be considered to be false or misleading only if it is demonstrated that there are no reasonable grounds to believe that they will occur. On that basis, I do not accept the alternative case advanced by the ACCC. 653 As a result it is not necessary to consider whether there were reasonable grounds for the making of the representations at the time that Geowash engaged in the conduct for the purposes of determining whether there is accessorial liability on the part of Ms Ali and Mr Cameron: Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175; (2004) 160 FCR 1. Otherwise, I deal below with the claim that Ms Ali and Mr Cameron were knowingly concerned in or parties to the conduct comprising the charging representation that I have found to have occurred and to have been a contravention of s 18 of the ACL.

[48]

Alleged false statement as to price 654 The ACCC alleges that the conduct relied upon to establish the Charging Representation also established a contravention of s 29(1)(i) of the ACL. It was said to involve the making of a false or misleading representation with respect to the price of goods or services. The ACCC was coy as to how the case under s 29(1)(i) was formulated. The case advanced was simply that the same conduct contravened s 29(1)(i). 655 The ACL defines price as 'the amount paid or payable (including any charge of any description)' for the acquisition of goods or services. 656 The conduct said to amount to the Charging Representation concerned the general approach to charging under the franchise agreements. The agreements established a relationship between the parties. It conferred certain rights on the franchisees to use the Geowash logo and business model. An establishment fee was charged which was a charge of a character that might be considered to be a price for securing the rights. However, the focus of the case was on the statements made by Geowash about the ongoing charges that it could make under the agreement, particularly those for the design, fit-out and set-up of the franchise. Indeed, inherent in the case advanced by the ACCC was a claim that Geowash did not deal with franchisees on the basis that they would pay a purchase price for a franchise. Rather, the case advanced was to the effect that the statements made by Geowash principally concerned the manner in which it would charge for fit out and set up. The substance of the claim was that Geowash represented that franchisees would have to pay actual costs and so the invoices from Geowash would be for those costs when in fact the intention of Geowash was to invoice franchisees for amounts that were to be applied, amongst other things, to pay sales commissions to Ms Ali and Mr Cameron and to meet general expenses of Geowash. Charges of that kind were not a price for the franchise, but were costs that had to be met by the franchisee. I have accepted the ACCC's case in that regard. 657 In those circumstances, I do not accept the claim that Geowash contravened s 29(1)(i) by engaging in the conduct said to amount to the Charging Representation.

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Applicable principles 658 At all relevant times, s 21 of the ACL provided that a person must not, in trade or commerce, in connection with the supply or acquisition of goods or services engage in conduct that is, in all the circumstances, unconscionable. No issue is raised about the elements of s 21 other than the claim that the conduct of Geowash was unconscionable. For Ms Ali and Mr Cameron it was submitted that the conduct of Geowash was not unconscionable and therefore they could not be found to be knowingly concerned in or a party to unconscionable conduct. 659 In applying s 21 it is important to avoid seeking to define unconscionable conduct in a manner that diverts attention to an inquiry as to whether conduct is honest, fair, reasonable or morally disgraceful or to be treated with opprobrium. The focus of the provision is upon proscribing conduct that is against conscience; that is against an inner sense of what is right and wrong. Therefore, the statutory provision requires conduct to be measured against norms of commercial behaviour guided by a business conscience 'permeated with accepted and acceptable community values': Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50; (2015) 236 FCR 199 at [298] (Allsop CJ). The definition of legal obligations by reference to an objective community standard of usual or reasonable behaviour is well-known and familiar. In such areas it is not the sensibilities or idiosyncrasies of the particular judge that are to be used to evaluate the behaviour nor is alternate language to be applied as a substitute for measuring the conduct by reference to the requisite standard. 660 Further, and fundamentally, the business conscience embodied in the statutory concept of 'unconscionable' when applied to dealings in goods and services is to be understood as one formed in the context of established commercial principles concerning contracts, property, securities, partnerships, corporations and agency. Whether conduct is unconscionable is to be measured by reference to what is required by all aspects of corporate law. The question to be asked is: what would a person of good commercial conscience do when selling and acquiring goods and services in the particular circumstances of the case? 661 Persons of good business conscience are expected to abide by the norms embodied in commercial law. They are also expected to conform to standards of generally accepted commercial behaviour expressed in codes of conduct. They may be expected to take steps that are necessary to reasonably protect and advance their own interests without exploiting a lack of commercial experience or expertise on the part of those they are dealing with in business. In a modern business setting they are expected to be fair, honest and open. The time when the rough and tumble of commerce required the buyer to beware or be left without any basis for complaint in the absence of the extremes of fraud or coercion are well behind us. The business community does not condone sharp practice, a lack of frankness, reliance on technicality, abuse of trust, exploitation of an imbalance in commercial or financial power or tactical steps designed to overbear as a means to secure agreement. The complexity of modern commerce depends upon those with experience and expertise in the goods and the services they supply acting according to proper standards in their dealings in supplying those products. The pace of business and the technicality of its subject matter means that buyers of goods and services lack both the time and the knowledge to be able to undertake the scrutiny and inquiries necessary if buyer beware was the governing standard. 662 However, unconscionability is not the mere breach of accepted standards of commercial behaviour. Section 21 does not have the consequence that any breach of the norms underpinning commercial laws or those expressed in codes of conduct or prevailing business standards becomes a contravention of the ACL. Nor is it the case that any conduct that involves an element of hardship or unfairness to the other party is unconscionable. Rather, unconscionable conduct is characterised by a substantial departure from that which is generally acceptable commercial behaviour. It is a departure which is so plainly or obviously contrary to the behaviour to be expected of those acting in good commercial conscience that it is offensive. So, at general law, an element of hardship or unfairness in the terms of a transaction or in the manner of its performance is an insufficient basis to set aside a contract on the basis of unconscionability: Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 at [26]. 663 The requirement that the conduct be plainly or obviously outside the behaviour expected of those acting with good commercial conscience arises because unconscionability is a term that is reserved for more extreme cases of breach of a moral or normative standard. There is no real basis upon which it might be justified or defended However, the use of words such as 'a high level of moral obloquy' to describe such behaviour is to be avoided because it takes the inquiry away from an assessment of what is required by good commercial conscience (in the context of the commercial law and standards of business behaviour generally observed at the time) and directs attention to an evaluation of whether the conduct is shameful or is to be denigrated or severely censured. Conduct may be unconscionable without inviting vilification or severe condemnation. It is conduct that would be understood to be clearly wrong by a person of good business conscience. It is not necessary that, in addition, it be conduct of a kind that would lead to disgrace and eternal damnation unless absolved. 664 The opposite is also to be avoided. The injunction against unconscionable dealings reflects an expectation that all commercial actors should adhere to the standards generally observed by the commercially moral and upright. However, for the sanctions in the ACL to apply, there remains a need to demonstrate a quality to the failure to observe the norms of commercial behaviour that is properly characterised as unconscionable. It is conduct that is excessive or unwarranted or without principle. These descriptions are not apt unless the conduct is well outside the boundary marked out by 'the normative standard of a business conscience' captured by the term unconscionable, to borrow the phrase of Allsop CJ in Paciocco. Those standards were summarised by Allsop CJ in the following terms (at [296]): The working through of what a modern Australian commercial, business or trade conscience contains and requires, in both consumer and business contexts, will take its inspiration and formative direction from the nation's legal heritage in Equity and the common law, and from modern social and commercial legal values identified by Australian Parliaments and courts. The evaluation of conduct will be made by the judicial technique referred to in Jenyns. It does not involve personal intuitive assertion. It is an evaluation which must be reasoned and enunciated by reference to the values and norms recognised by the text, structure and context of the legislation, and made against an assessment of all connected circumstances. The evaluation includes a recognition of the deep and abiding requirement of honesty in behaviour; a rejection of trickery or sharp practice; fairness when dealing with consumers; the central importance of the faithful performance of bargains and promises freely made; the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage; a recognition that inequality of bargaining power can (but not always) be used in a way that is contrary to fair dealing or conscience; the importance of a reasonable degree of certainty in commercial transactions; the reversibility of enrichments unjustly received; the importance of behaviour in a business and consumer context that exhibits good faith and fair dealing; and the conduct of an equitable and certain judicial system that is not a harbour for idiosyncratic or personal moral judgment and exercise of power and discretion based thereon. 665 To similar effect is the statement by Besanko, Gilmour and Wigney JJ in Kobelt v Australian Securities and Investments Commission [2018] FCAFC 18 at [192] concerning the nature of unconscionable conduct: It is something more than conduct which may be considered unfair and all the relevant circumstances must be considered. That includes the maters listed in the statute. Some of those matters may not be relevant in a particular case and not all of the matters may point to the same conclusions. Features such as dishonesty, trickery, predatory or overbearing behaviour, choice or the absence of choice, disadvantage, vulnerability and exploitation all remain relevant matters. The Court is required to evaluate the conduct by reference to the relevant principles. 666 The proper approach is to consider what is right and proper in commercial dealings and then evaluate how far from such standards (if it all) the conduct in question has departed. There must be aspects of the conduct in the particular case that mean that it may be plainly or obviously criticised when viewed through the lens of an understanding of proper commercial behaviour according to prevailing norms and standards. As stated by Middleton J in Paciocco at [405]: … in the context of determining the content of statutory unconscionable conduct, as described by Allsop CJ, the task of a court is to make an evaluation of the facts and an ultimate determination by reference to a statutory standard of conduct, guided by the text and structure of the statute and its purpose. This task is a familiar one undertaken in the course of the judicial process. 667 As noted in Kobelt, in determining whether conduct is unconscionable the Court must consider whether to have regard to the non-exhaustive and non-prescriptive list in s 22, although the presence of one or more of those matters will not be determinative. 668 Also, it is to be noted that s 21(4) of the ACL provides: It is the intention of the Parliament that: (a) this section is not limited by the unwritten law relating to unconscionable conduct; and (b) this section is capable of applying to a system of conduct or pattern of behaviour whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and (c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of: (i) the terms of the contract; and (ii) the manner in which and the extent to which the contract is carried out; and is not limited to consideration of the circumstances relating to formation of the contract. 669 The proper approach to be adopted where the claim made is of a system or pattern was considered in Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155 at [104] where the Court summarised the position in the following terms: The extension of s 21 by para (4)(b) to a "system of conduct or pattern of behaviour" which is unconscionable removes the necessity for revealed disadvantage to any particular individual. A "system" connotes an internal method of working, a "pattern" connotes the external observation of events. These words should not be glossed. How a system or a pattern is to be proved in any given case will depend on the circumstances. It can, however, be said that if one wishes to move from the particular event to some general proposition of a system it may be necessary for some conclusions to be drawn about the representative nature or character of the particular event. The notion of unconscionability is a fact-specific and context-driven application of relevant values by reference to the concept of conscience: see Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199 and Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; 249 FCR 421. It is an assessment of human conduct. A system of conduct requires, to a degree, an abstraction of a generalisation as to method or structure of working or of approaching something. If s 21(4)(b) is to be engaged, it is the system that is to be unconscionable. Nevertheless, the concept of unconscionability (even of a system) is a characterisation related to human conduct by reference to conscience, informed by values taken from the statute. As Cardozo J said (speaking for the Court) in Lowden v Northwestern National Bank & Trust Co [1936] USSC 82; 298 US 160 at 166 (1936) (albeit in a very different context): "A decision balancing the equities must await the exposure of a concrete situation with all its qualifying incidents. What we disclaim at the moment is a willingness to put the law into a straitjacket by subjecting it to a pronouncement of needless generality." This expression of legal technique in the firmly gentle style of that great judge only reflects what other great judges of the tradition of Equity have said, such as in the passage of the judgment of Dixon CJ, McTiernan J and Kitto J in Jenyns v Public Curator (Qld) [1953] HCA 2; 90 CLR 113 at 119 adopting what Lord Stowell had said in The Juliana [1822] EngR 235; (1822) 2 Dods 504 at 522; [1822] EngR 235; 165 ER 1560 at 1567: "A court of equity....looks to every connected circumstance that ought to influence its determination upon the real justice of the case." These expressions of legal technique should be recalled when the temptation arises to seek to re-define in short terms the words chosen by Parliament that require the application of general values to factual and contextual circumstance by reference to the notion of conscience. 670 Finally, the assessment of the conduct is not to be undertaken with the insights afforded by hindsight. The Court 'must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention': s 21(3)(a).

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Case advanced by ACCC 671 In closing submissions, the ACCC invited the Court to make the following findings which were said to amount to unconscionable conduct: (1) Geowash, by Ms Ali and Mr Cameron, negotiated the sale of franchises to prospective franchisees who were typically unsophisticated when it came to owning and operating a business. (2) In doing so, they ascertained from the prospective franchisee their maximum budget. (3) Despite the terms of the franchise agreement and disclosure document, and inconsistently with those documents, they negotiated with prospective franchisees as if a franchise could be acquired for a 'lump sum' and the lump sum discussed was, typically, the maximum budget the prospective franchisee told Ms Ali or Mr Cameron they could afford or could afford in the event that finance was approved. (4) They represented to the prospective franchisee that they would be able to acquire an operating Geowash franchise within the discussed budget. (5) Once they had negotiated the sale of a franchise and the prospective franchisee paid an initial franchise establishment fee and executed a franchise agreement, they invoiced the franchisee a series of lump sums, and required those lump sums to be paid when there was no right under the terms of the franchise agreement that entitled them to invoice or require payment in the way that occurred. (6) Requests for payment of lump sums often coincided with Geowash's bank account being short of funds. (7) Geowash demanded franchisees pay lump sums that were often more than the budget the franchisee had discussed. (8) The payments were not applied as contemplated by the terms of the franchise agreement. (9) Ultimately, Geowash failed to deliver an operating car wash franchise to a number of franchisees. (10) Contrary to the terms of the franchise agreement, they spent significant portions of the funds franchisees paid Geowash for purposes not permitted under the franchise agreement and not otherwise disclosed to franchisees, including: (a) the payment of the general operating costs and expenses of Geowash; and (b) the payment of 'commissions' to Ms Ali and Mr Cameron. (11) Commission payments to Ms Ali or Mr Cameron were often made immediately after receipt by Geowash of a lump sum payment from a franchisee. 672 The ACCC invited the Court to make those findings in respect of dealings with each of the franchisees who entered into franchise agreements with Geowash. In opening, the case was characterised as one in which there was an 'unconscionable scheme employed by Geowash, by Ms Ali and Mr Cameron'. The deployment of funds received from franchisees to pay sales commissions and general operating expenses was also said to be unconscionable. 673 It was suggested that the ACCC could not establish unconscionability as to all franchisees by leading evidence concerning only seven of the franchisees. I do not accept that to be the case where the allegation is of a system or practice. Further, Ms Ali provided evidence in her affidavit of the extent to which she said there had been expenditure on the fit-out and set-up for each franchisee. Both she and Mr Cameron gave evidence of a business model that was said to apply to all dealings with franchisees. The evidence they gave concerning the payment of commissions related to all franchisees. I am satisfied that the ACCC made clear that the case advanced as to unconscionability concerned dealings with all franchisees who entered into agreements with Geowash.

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Findings as to alleged unconscionable conduct 674 It is necessary to look at the range of conduct in respect of which the ACCC invited the Court to make findings and evaluate its overall character. It is not appropriate to compartmentalise aspects of the conduct and seek to characterise each aspect. Rather, the task is to assess every connected aspect as a whole. 675 The way Geowash dealt with the funds it received from franchisees was contrary to the terms of the franchise agreements that it made with franchisees. Under the agreements, aside from the initial franchise fee and fees associated with negotiating the lease of the premises (described in the Disclosure Document as being up to $8,000), the principal charge permitted under the franchise agreements was for Fit Out Costs. Once the franchise site was set up, Geowash could also charge fees for training and the like, there could be charges for the supply of various items (to be provided by Geowash Supplies) and Geowash would be entitled to receive ongoing fees calculated by reference to turnover. However before then, once the establishment and leasing fees were paid, Geowash could only really require the franchisee to meet the actual costs of establishing an outlet. The establishment of the franchise site was the responsibility of the franchisee but the agreement provided for Geowash to be able to require that task to be undertaken by Geowash as agent for the franchisee and for costs to be paid up-front. In all cases, Geowash did undertake the fit-out and set-up for the franchisee. It invoiced franchisees half the amount once the site was identified and well before it needed the money. 676 Further, in addition to the terms of the franchise agreement about the funds, franchisees were told that the amount charged was what was required to meet the costs to fit-out and set-up the outlet. Ms Ali and Mr Cameron, in dealing with franchisees both before and after they entered into the franchise agreements did describe the arrangement as involving two staged payments for the purchase of the Geowash franchise after the establishment fee had been paid. However, in context the reference to a 'purchase price' was a description of an amount that comprised the establishment fee, the leasing fee and the Fit Out Costs. It was an amount justified by Geowash on the basis of what it would actually cost to set-up the franchise. This was reflected in the practice of Geowash in a number of cases agreeing to place a cap on the 'purchase price' amount. The cap reflected the character of the amount of the staged payments being presented as what needed to be spent by Geowash to establish the site. 677 Geowash adopted a practice of invoicing for the two staged payments by reference to an amount established through discussions with the franchisee. It was an amount that reflected an assessment made by Ms Ali and Mr Cameron as to what the franchisee was willing to pay rather than an assessment of the likely cost. Ms Ali and Mr Cameron set the staged payments in the expectation that the total amount would cover sales commissions of at least 20%, the costs of fit-out and set-up and also provide further funds that could be applied to the general purposes of Geowash. When the funds were received they were treated as Geowash funds rather than funds received as agent on behalf of the franchisee for the purpose of arranging fit-out and set-up. 678 This was a dishonest and sharp practice. It meant that franchisees were encouraged to invest in the belief that most of the money they were providing would be applied to the quality of their Geowash outlet to be set-up by Geowash when this was not the case. 679 The amounts involved were significant such that they might be expected to be applied to construct an outlet of an appropriate standard. In fact, Geowash took the funds that Ms Ali and Mr Cameron said were to be applied to meet the costs of establishing the franchise and used them first to pay sales commissions to themselves and then used the monies as if they were general funds available to Geowash to meet its own costs and expenses. This was conduct that would be considered to involve trickery and deception when measured against business norms. 680 As a consequence, funds that should have been available to meet fit-out costs were not available when required. This lead to instances where Geowash then had to request more money (for example, Geowash Wanneroo) and instances where there were complaints about the standard of the fit-out being substantially inferior to that which had been represented (for example, Geowash Domain). In some cases, there were reasons why there were delays in establishing a site, such as planning issues or failure to reach an agreement with a proposed landlord. However, the significant problem with Geowash applying funds to meet sales commissions and general costs and expenses was that funds which should have been held and set aside for fit-out and set-up (or ultimately refunded if it was not possible to identify and set-up a suitable site within the time available) were deployed by Geowash for other purposes. Inherent in the course of conduct by Geowash was that it exposed franchisees to the very real risk that Geowash would take their money and not be able to establish an outlet of the kind that had been described or not be able to establish a hand car wash outlet at all. Franchisees were vulnerable to such a risk because Geowash had complete control of the funds which were received well before they were required and in respect of which Geowash had no practices or systems to ensure that the funds were applied only to meet the costs of fit-out and set-up. Ms Ali and Mr Cameron simply took the money and paid large amounts of it to themselves and their associates, leaving only the balance to meet fit-out and set-up costs. 681 Of the franchisees who gave evidence, most were unsophisticated and inexperienced in business. They were applying most if not all of their available financial resources to the franchise and some were being encouraged by Geowash to borrow more funds. There is no evidence as to the level of experience of other franchisees. In those circumstances, on the evidence, I do not find that all were vulnerable by reason of their lack of experience. However, given the nature of the course of conduct followed by Geowash, as directed by Ms Ali and Mr Cameron, it was conduct that would be likely to result in Geowash taking advantage of any trusting franchisee, even one who had been in business before. The unconscionable nature of the conduct was not in taking advantage of any gullibility or inexperience. Rather, the business model was inherently dishonest. It involved presenting the staged payments as being amounts that were necessary to meet the costs to fit-out and set-up an outlet of a particular standard for the particular franchise and therefore would be applied to set-up costs when the intention was that a large part of the monies would not be used for that purpose at all. I also note that the nature of the franchise is such that it is likely to attract inexperienced people with little business experience. 682 In those circumstances, I find that the conduct of Geowash in dealing with franchisees as to the charges to be made for a franchise and the application of those funds was unconscionable. It was not simply a case of a breach of the franchise agreement or a failure on the part of those acting for Geowash to properly understand their obligations. It was a considered practice that involved creating the false impression that the money paid to Geowash by franchisees would go towards the costs of the fit-out for their outlet when, in fact, Ms Ali and Mr Cameron intended to pay large amounts to themselves from those monies. It involved invoicing franchisees well before the funds were required for the fit-out of their outlet. It involved treating the monies received as Geowash funds and keeping no records as to the application of funds for the fit-out of each franchise site. As a result, if Geowash went into administration (as in fact occurred) there would be no funds set aside for the benefit of each franchisee against which a claim could be made that the funds should be returned or applied for the purpose for which they had been paid, namely the fit-out and set-up of a particular outlet. In that event, when the merry-go-round stopped, some franchisees would have paid a very large amount of money and be left without an outlet and others would have an outlet on which Geowash had spent much less than had been represented. 683 I do not accept that the ACCC has demonstrated that the requests for payments coincided with the bank account of Geowash being short of funds. The requests were made when a site was selected and when works were to be commenced. I do accept that as soon as funds were received they were used to meet commission payments to Ms Ali and Mr Cameron and then treated as general funds available to Geowash. For reasons I have already given, I do not accept that it was part of the course of conduct that Geowash would not deliver an operating car wash. However, the conduct engaged in by Geowash substantially compromised its ability to deliver an outlet of the kind that Ms Ali and Mr Cameron described in their dealings with franchisees. In my view, these qualifications to the findings sought by the ACCC do not detract from the charging conduct I have found being characterised as unconscionable.

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Franchising Code of Conduct 684 The Franchising Code of Conduct (Code) is made under s 51AE of the CCA. It is a mandatory industry code. Its provisions take effect as regulations under the CCA. Further, it is prescribed for the purposes of s 51AE(2) and pecuniary penalties apply for contravention of its provisions. 685 The Code applies to conduct occurring on or after 1 January 2015: cl 3(1). It requires a franchisor to create a disclosure document containing prescribed information to be updated within four months after the end of each financial year: cl 8. A copy of the disclosure document must be given to a prospective franchisee at least 14 days before entry into a franchise agreement: cl 9. Amongst other things, the disclosure document must specify: (1) if a prepayment is required before the franchise agreement is entered into, why the money is required, how the money is to be applied, who will hold the money and the conditions under which the payment will be refunded: Annexure 1 cl 14.1 and cl 14.2; (2) details of the range of cost to start operating the franchised business for real property, equipment, fixtures, other fixed assets, construction, remodelling, leasehold improvements and decorating costs, inventory required, security deposits, additional funds including working capital required before operations begin and any other payments by a franchisee to begin operations: Annexure 1 cl 14.3; and (3) details of each recurring or isolated payment payable by the franchisee to the franchisor: Annexure 1 cl 14.6. 686 Further, as I have already noted, there is an obligation under the Code to act in good faith. It is expressed in the following terms in cl 6(1): Each party to a franchise agreement must act towards another party with good faith, within the meaning of the unwritten law from time to time, in respect of any matter arising under or in relation to: (a) the agreement; and (b) this code. 687 Issues arise in these proceedings as to whether a franchisor who deals with franchisees in a manner that disregards the terms of the franchise agreement concerning when money is required and how it is to be applied (in particular in respect of establishment and fit-out costs) conforms to the requirement under cl 6(1) of the Code to act towards the franchisee 'with good faith, within the meaning of the unwritten law from time to time'.

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The structure of the good faith provision in cl 6 of the Code 688 Clause 6 has a number of elements. The first element expresses the obligation to act in good faith. The form of the provision is to impose a general obligation to act in good faith and then to draw on the unwritten law to define the term good faith. The clause does not provide that there will be an obligation of good faith in circumstances where, and to the extent that, the unwritten law recognises such an obligation. Rather, by operation of cl 6(1) there is an obligation to act towards the other party in good faith. Accordingly, the unwritten law is deployed to give meaning to the term 'good faith', but is not to govern whether there is a good faith obligation. The good faith obligation applies in all instances. 689 Structuring the first part of the provision in this way assumes that there is (and will be over time) a relevant body of unwritten law as to what good faith means. However, the common law uses the term good faith in many different contexts to different effect, including in the law as to priorities between property interests, public law, the law as to trustee obligations and in describing directors' duties. 690 Given the use of the term 'good faith' in a provision regulating the conduct of parties to a franchise agreement, it may be approached on the basis that it refers to judicial decisions as to the meaning of good faith as part of the law concerning agreements. However, even taking that step to narrow the inquiry, there is the potential for variation as to meaning if the unwritten law uses the term 'good faith' in a contextual way or with a degree of semantic breadth. 691 In the decisions concerning good faith as part of contract law (see below), the meaning of the term is explored in different circumstances, including negotiating in good faith, exercising contractual rights in good faith (such as the right of termination) and performance of contractual obligations in good faith. In some cases, there is a consideration of the nature and extent of a good faith obligation that is being recognised. In other cases, the term is considered but only for the purposes of reaching a conclusion that it does not arise. 692 Further, cases concerned with contractual provisions that expressly impose a good faith obligation must be approached with some care. In those instances, it is not the unwritten law that determines the meaning, it is the language used by the parties in the particular case and the proper construction of the words used according to the law as to the interpretation of commercial instruments. The parties may expressly define the term or its meaning may have to be discerned contextually. In either case, that is not the meaning that the regulation incorporates. 693 So, the form of regulation appears to be to remove any uncertainty as to whether there is a good faith obligation as part of the general law of contract when it comes to franchise agreements and applies the meaning of good faith that has been described in the contract cases even though the concept may not have been recognised as forming part of the unwritten law in the particular circumstances. 694 The second element of cl 6 takes the obligation of good faith (as imposed) and applies it also to negotiations and dealings between parties to a proposed franchise agreement. Again, this is not to incorporate the unwritten law as to negotiating in good faith (which is currently confined to instances where there is an express agreement to do so). Rather, the clause requires good faith (as defined by the unwritten law) in all negotiations and dealings. 695 The third element is a provision that irrespective of the meaning of good faith under the unwritten law, conformance with the obligation to act in good faith may be evaluated by having regard to whether the party acted honestly and not arbitrarily and whether the party cooperated to achieve the purposes of the agreement. Expressed in this way, the clause incorporates these matters into the meaning of good faith for the purposes of the clause. 696 Finally, cl 6(6) states that a person is not prevented by the obligation to act in good faith from acting in its legitimate commercial interests. The choice of the expression 'does not prevent' in the clause may have significance; as may the fact that the commercial interests are not expressly confined to those associated with the terms or performance of the agreement. Importantly, the language used removes any uncertainty as to whether the good faith obligation is akin to a form of fiduciary obligation requiring a party to be guided or influenced by the interests of the other party. It probably also excludes the possibility of a form of obligation that would require each party to fairly balance or weigh up their own interests and the interests of the other party. Each party may put its own interests ahead of the other party. Also, each party may act in its own interests even though there may be detrimental consequences for the interests of the other party. However, the expression 'legitimate' introduces a limit upon the interests to which a party may have regard and still be acting in good faith. Legitimacy is to be judged by reference to the nature of the agreement and the rights and obligations of the party whose conduct is under scrutiny.

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Extrinsic materials 697 Clause 6 of the Code was introduced to implement a recommendation by Mr Alan Wein in his 2013 report to the Minister for Small Business entitled 'Review of the Franchising Code of Conduct' (Franchising Review): Explanatory Statement for Select Legislative Instrument No 168, 2014 at p 7. The recommendation was for the introduction of an express obligation to act in good faith that should not be defined; 'instead the unwritten law relating to good faith should be incorporated in a manner similar to the unconscionable conduct prohibition' set out in s 20 of the ACL. It should not be able to be excluded or limited. Further, the obligation to act in good faith should 'be clearly stated as not preventing a party from acting in its legitimate business interests'. 698 The analogy with s 20 of the ACL is to be noted. It provides that a person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time. As at the time of the Franchising Review, statutory equivalents to s 20 had been held to do no more than apply statutory remedies where there was unconscionable conduct according to equitable principles: Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51 at [40]. This appears to be the approach that was contemplated by the Franchising Review. That is, it would simply add a right to the statutory remedies where it was demonstrated that there had been a breach of the common law obligation of good faith. 699 However, as I have noted, the language adopted in cl 6 was not of that character. Rather, cl 6 itself provided that there was an obligation to act toward the other party with good faith. Irrespective of whether there was such an obligation at common law, the Code created such an obligation. However, the meaning of good faith was to be determined by reference to the common law. 700 Importantly, the Explanatory Statement did not repeat the analogy with s 20 of the ACL. Instead, it stated: The most significant change from the 1998 Code is the introduction of an obligation on the parties to a franchise agreement to act in good faith (clause 6). This obligation applies both to franchisors and franchisees in respect of any matter arising under or in relation to the franchise agreement or the Franchising Code. The meaning of good faith under the Franchising Code is the same as at common law. While the obligation is not defined the Franchising Code contains a non-exhaustive list of matters that the courts may have regard to when determining whether a breach of the obligation has occurred. The purpose of this list is also to provide some guidance to assist franchise participants to understand the nature of their obligation to act in good faith. 701 The inclusion of the non-exhaustive list, namely whether the party acted honestly and not arbitrarily and whether the party cooperated to achieve the purposes of the agreement, was also an aspect that did not form part of the recommendation. These matters reinforce the conclusion that the intention was to use the unwritten law to define the term 'good faith', but to provide that there was an obligation of good faith in the negotiation and performance of franchise agreements, irrespective of whether there was such an obligation under the unwritten law (and the content of the law as to the circumstances in which such an obligation may arise). 702 The introduction of a good faith obligation was recommended by the Franchising Review despite a recognition that views differ on the degree of uncertainty regarding the nature of any obligation to act in good faith under the common law of Australia: at p 74-75, 80. It was recognised expressly that this may mean that there is uncertainty regarding the nature of an obligation expressed by reference to the common law. As a result, it was accepted as 'probably accurate' that there would generally be a need to obtain legal advice to understand how the obligations in the unwritten law affect the actions of the parties and their rights and obligations under the franchise agreement. However, the uncertainty was embraced as a foundation for the recommendation on the basis that it would promote flexibility by allowing judges to decide on a case-by case basis whether there is an obligation to act in good faith, and if so whether that obligation has been breached: at p 80. 703 In this area of the common law, a significant part of the discourse concerns the extent to which the recognition of a general obligation of good faith in contractual performance would introduce uncertainty and if so whether the degree of any such uncertainty is incompatible with a law as to the enforcement of promises: eg M G Bridge, Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith? (1984) 9 Can Bus LJ 385; H K Lucke, Good Faith and Contractual Performance in Finn P D (ed) Essays on Contract (Law Book Co 1987) p 155, 165-167 and J Allsop Good faith and Australian contract law: A practical issue and a question of theory and principle (2011) 85 ALJ 341 at 343-344. However, these concerns are put to one side by the Code. 704 The Franchising Review does refer to decisions being made on a case-by-case basis as to whether there is a common law obligation of good faith. However, given the recommendation to include an express obligation to act in good faith, this possibility must be confined to a conclusion that under the unwritten law there was no obligation to be performed in the particular circumstances in order to satisfy the obligation of good faith. 705 The Franchising Review also noted that one significant question in the context of good faith was where the 'gap' lies between conduct that would be unconscionable under the ACL and conduct that, though not unconscionable may nevertheless breach any duty to act in good faith: at p 81. This is an issue addressed later in these reasons.

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The unwritten law as to good faith in contractual dealings 706 In the High Court, it remains an open question as to whether there is a general obligation to act in good faith in the performance of contracts and whether contractual powers and discretions are limited by requirements of good faith and rationality analogous to those applicable in the sphere of public law: Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 at [42] and [107]; and Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 at [40], [86]-[88] and [156]. In particular, it is to be noted that the High Court has specifically reserved as an open question whether there may be reasoning by analogy to public law principles requiring powers to be exercised for the purpose for which they were conferred and in a manner that is rational. 707 There is a considerable body of case law where the Court has construed a contractual power as being subject to a requirement that it must be exercised reasonably, or an obligation as being subject to a requirement that it be performed by reasonable steps being taken: see, for example Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571. 708 There are also cases where powers conferred upon a party to make adjudications or determinations for the purposes of the contract are required to be exercised honestly, reasonably and in good faith: Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 96; and WMC Resources Ltd v Leighton Contractors Pty Ltd [1999] WASCA 10; (1999) 20 WAR 489 at [46-47], [52], [60] and [83]. 709 Further, there is a contractual duty to cooperate in the doing of acts that are necessary to the performance of fundamental obligations under the contract: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607-608; Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 448-449. The corollary being that parties must also not obstruct performance of the contract: Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 at [156]. The parties must not hinder or prevent the fulfilment of the purpose of the express promises in the contract: Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126 at [36]. 710 However, these cases are not concerned with a general obligation of good faith in the negotiation and performance of a contract. Nor do they consider the content of any such general obligation. 711 There is another body of cases concerned with express contractual provisions requiring negotiation or other dealings 'in good faith'. In such instances, there may be regard to cases concerned with a general duty of good faith. However, ultimately, the conclusion reached in such cases depends upon the particular language used and its context in the particular instrument. 712 The principles as to proper construction of commercial instruments eschew literalism or formalism in interpretation. The process is to be guided by the perspective of a reasonable person in the position of the parties. This too ensures that there is a form of good faith in reaching a view as to the meaning of the contractual instrument. 713 In all of these established principles of the unwritten law as to agreements there are aspects of an approach that might form part of an overriding good faith obligation on all contracting parties. They are legal principles that ensure that for all parties there is reasonableness, cooperation and faithfulness to the nature and extent of the agreement they have made. 714 However, in my view, the form of cl 6 of the Code directs attention not to these cases (which might be said to reflect an underlying perspective of good faith or faithfulness to the bargain in the formulation of general law contractual principles), but rather to those cases that are concerned with the meaning of a particular good faith obligation to be applied to all contracts irrespective of their terms. In Australia, there have been a number of decisions in which consideration has been given to whether there is an obligation of good faith of a kind that would apply to all contracts in general and if so, the nature and extent of such an obligation. There remains uncertainty as to whether there is an overall obligation to act in good faith in all contractual dealings (whether they be negotiation of contractual terms, the performance of contractual obligations or the exercise of contractual powers and rights). Nevertheless, it is this body of case law that is to be considered in order to identify the relevant meaning of good faith under the unwritten law for the purposes of cl 6. 715 Of considerable influence in the area has been an address by Sir Anthony Mason in 1993, later published as Contract, Good Faith and Equitable Standards in Fair Dealing (2000) 116 LQR 66. There, the concept of good faith was described as embracing three aspects, namely: (1) an obligation on the parties to cooperate in achieving the contractual objects (loyalty to the promise itself); (2) compliance with honest standards of conduct; and (3) compliance with standards of contract which are reasonable having regard to the interests of the parties. 716 Consideration of the extent to which each of the three aspects of cooperation, honesty and reasonableness might form part of a good faith obligation in contract law can be seen in the case law. Also, there is an issue of the extent to which a party can act in good faith by pursuing its own commercial interests. This may be seen as an aspect of both loyalty to the promise and reasonableness. 717 As to honesty, there is a difference between honesty in communications in the course of negotiations and honesty in performance of the contract, particularly in the exercise of rights, powers or discretions. In the course of negotiations there is not yet any contractual obligation. 718 Nevertheless, parties may be expected to conform to general community standards of honest behaviour in what they do and say in forming a contract. The question is whether good faith requires a form of openness or disclosure or frankness in dealings. Or can self-interested parties, in good faith, proceed in contractual negotiations on the basis that it is up to each party to look after its own interests? Some contractual contexts are such that there is a level of trust reposed by one party in the other, for example dealings with a lawyer, doctor or financial adviser. In other contractual contexts, one party may seek to encourage a party to repose trust in what is being said by the other party. Contractual dealings with a relational character where one party acts in an advisory or expert capacity are different to instances which are usually commercial in character. These types of contextual circumstances may affect what a party negotiating or dealing in good faith may be expected to do in particular circumstances. 719 However, when it comes to honesty in performance, a party has (it may be presumed in good faith) secured contractual rights, powers and discretions. If they are broad or favour one party over another, a question then arises as to whether it is dishonest to rely fully upon the agreed terms or to exercise discretions with a keen eye to one's own interests. 720 It is also important to consider whether the ambit of the obligation to act in good faith depends upon the sophistication of the contracting counterparty. Does it require different steps when parties are relatively equal in their bargaining position compared to where there is inequality in bargaining power? 721 With these issues in mind, I turn to a consideration of the range of views expressed in the decided cases.

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Renard Constructions 722 In Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, the Court considered a contractual provision that allowed a principal, in the event of default by the contractor, to take over the work remaining to be completed or cancel the contract. The provision stated that if the contractor within a specified period failed to show cause to the satisfaction of the principal why the power should not be exercised by the principal, then the principal could take over the work. The principal purported to exercise the power to take over the work and exclude the contractor from the site. The contractor treated the principal's action as a wrongful repudiation and claimed to have rescinded the contract. 723 The matter proceeded to arbitration. There was a question raised before the arbitrator by the principal as to whether the exercise of the contractual power was qualified by a requirement that it be exercised reasonably. Despite that, the case was fought before the arbitrator on the basis, in effect, that the power had been exercised reasonably. The arbitrator found that the power had not been reasonably exercised. On an appeal to the Court, it was found that the power was not qualified by a requirement of reasonableness and the arbitrator had been in error. Then, on appeal, Priestly JA (Handley JA agreeing) found that the decision of the primary judge was in error because the case before the arbitrator had been fought on the basis that there was a requirement of reasonableness. Therefore, leave should not have been given to appeal on a basis that had not been fought substantively before the arbitrator. 724 Meagher JA, in dissent, found that the primary judge was correct in rejecting the submission that reasonableness could be imported as a limitation on the exercise of the power. However, he found that the principal could not have been satisfied as required because the principal's mind was so distorted by prejudice and misinformation that the required state of satisfaction could not be formed. 725 Priestley JA found as a matter of construction that there was an obligation to act reasonably as well as honestly in forming the opinion that the contractor had failed to show cause. 726 Priestley JA found that requirements of reasonableness were to be implied both in forming the view whether cause had been shown and in deciding whether to exercise the contractual power: at 257, 259 and 262. The implication was to be made both in the particular circumstances of the case (that is, in fact or ad hoc) and in law. His Honour then expressed obiter views to the effect that there were many strands to support 'the existence in all contracts of a duty upon the parties of good faith and fair dealing in its performance': at 268. It was an obligation that was equated by his Honour with the obligation of reasonableness in performance that his Honour considered was to be implied: at 263. It is significant that his Honour saw the obligation as requiring reasonableness both in forming the required state of non-satisfaction and in making the decision to exercise the powers to take over the works or cancel the contract. The issue was not considered by other members of the Court, although Handley JA did express general agreement with much of what had been written by Priestly JA on the issue: at 279.

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Strzelecki Holdings 736 The Court of Appeal in Western Australia considered the meaning of good faith as expressed in a contractual term in Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010) 41 WAR 318. In that case, the parties entered into a memorandum of understanding to govern their dealings in relation to the sale of certain land by Cable Sands to Strzelecki. They agreed to deal with each other in good faith. Under the memorandum, Cable Sands was required to arrange for an environmental engineering study concerning a strategy to deal with tailings on the land. Strzelecki was to carry out a feasibility study in relation to subdivision and development of the land and provide a copy to Cable Sands. Then, after the feasibility study, Strzelecki was to advise whether it wished to proceed with negotiations to conclude a contract to purchase the land on the basis of certain specified terms. If, after that, the parties acting in good faith could not conclude a contract of sale within a specified period then their dealings would be at an end. 737 In the course of their dealings, Cable Sands demanded an indemnity and a bank guarantee. Its conduct in doing so was alleged to be a breach of the obligation on Cable Sands to deal with Strzelecki in good faith. 738 In considering the meaning of the term as used by the parties in their agreement, Pullin JA (Newnes JA agreeing) reviewed the authorities on the content of the obligation to act in good faith in the performance of a contract. His Honour adopted the approach of Allsop P in United Group Rail Services Ltd v Rail Corporation (NSW) [2009] NSWCA 177; (2009) 74 NSWLR 618 to the effect that it imported a requirement to bring an honestly held and genuine belief about the parties mutual rights and obligations and about the controversy between them to the negotiations and to negotiate by reference to such beliefs: at [56]. His Honour found that the content of an offer did not need to pass some objective test of reasonableness as assessed by the courts in order to meet the requirement to negotiate in good faith: at [62]. If conduct was shown to be unreasonable or capricious then that would be relevant 'but only insofar as it provided evidence from which it may be inferred that a party was not honestly subjecting themselves to the process of negotiation or not keeping an open mind and therefore not acting in good faith': at [63].

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Paciocco 739 I have already made reference to the decision in Paciocco in the course of dealing with the claim that Geowash engaged in unconscionable conduct. The case also dealt with good faith as developed in the common law cases as an obligation attending the performance of a contract. Allsop CJ (Besanko and Middleton JJ agreeing) described the burden of the obligation at [288]: The usual content of the obligation of good faith that can be extracted from cases such as Renard Constructions, Hughes Bros Pty Ltd v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91, Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187; 69 NSWLR 338, Alcatel Australia Ltd v Scarcella [1998] NSWSC 483; 44 NSWLR 349, and United Group Rail Services Limited is an obligation to act honestly and with a fidelity to the bargain; an obligation not to act dishonestly and not to act to undermine the bargain entered or the substance of the contractual benefit bargained for; and an obligation to act reasonably and with fair dealing having regard to the interests of the parties (which will, inevitably, at times conflict) and to the provisions, aims and purposes of the contract, objectively ascertained. 740 Allsop CJ described the contractual duty of good faith as imposing a standard of conduct. The standard was summarised in the following terms at [290]: The standard of fair dealing or reasonableness that is to be expected in any given case must recognise the nature of the contract or relationship, the different interests of the parties and the lack of necessity for parties to subordinate their own interests to those of the counterparty. That a normative standard is introduced by good faith is clear. It will, however, not call for the same acts from all contracting parties in all cases. The legal norm should not be confused with the factual question of its satisfaction. The contractual and factual context (including the nature of the contract or contextual relationship) is vital to understand what, in any case, is required to be done or not done to satisfy the normative standard. 741 Significantly, the content of what may be required to satisfy the good faith obligation is not the same in all cases. It is a standard that is to be applied having regard to the context. Two large corporations dealing with the terms upon which the interests comprising a large international business may be acquired will not be required to do the same things to fulfil the obligation as a franchisor dealing with franchisees with little business experience. The standard is the same in both cases. However, what must be done to satisfy the standard must be evaluated in the particular circumstances.

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YUM! Restaurants 742 In Virk Pty Ltd (in liq) v YUM! Restaurants Australia Pty Ltd [2017] FCAFC 190, the Court considered whether compliance with an implied obligation of good faith and reasonableness as applied to the exercise of a discretionary contractual power to fix maximum prices was to be adjudged subjectively or objectively. The power was found to have been exercised honestly: at [152]. However, it was said that it also had to be exercised in a manner that was objectively reasonable. 743 The Court found that the obligation of good faith and reasonableness 'is to be considered in a composite and interrelated sense': at [164]. Reasonableness was not be evaluated separately from good faith as if it were akin to a tortious duty. Rather, reasonableness was part of the quality of the conduct to be evaluated so as to 'discern whether it was capricious, dishonest, unconscionable, arbitrary or the product of a motive antithetical to the object of the contractual power'. It was consideration of the relevant conduct 'within those confines' that informed whether or not the conduct had been exercised in good faith. The Court then said at [165]: The converse in our opinion, also follows. Where, as in this case, there is a finding of good faith (or, specifically, a finding that there was an absence of bad faith: in effect, not having demonstrated that there was a lack of good faith) attaching to the exercise of the contractual power, then that exercise must necessarily also have been reasonable. 744 Therefore, the reasonableness aspect of the obligation of good faith and reasonableness was not to be regarded as a duty to exercise due care and skill or to produce a reasonable outcome: at [178]. Rather, the focus must be upon the conduct of a party and whether it is to be seen as capricious or arbitrary or dishonest or for a purpose foreign to the objective of the contractual obligation or power having regard to acceptable norms of commercial conduct: at [183]. So, the question is whether the way the contracting party was behaving manifested a lack of good faith and reasonableness as being the posture of the party, not whether the exercise of power or discretion may be viewed objectively as unreasonable. The latter may inform the former, but it is the former that is the extent of the duty to be implied as an incident of the contractual relationship.

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Good faith within the meaning of the unwritten law 746 Having regard to the above authorities which indicate some progression and development in the understanding of what is required by an obligation to act in good faith in a contractual context, I would summarise the current state of the unwritten law as to the meaning of good faith for the purposes of cl 6(1) of the Code in the following terms: (1) the term 'good faith' imports a normative standard to be observed by the parties in dealings as to matters to which the standard is applied; (2) the normative standard embraces an obligation to act honestly and with fidelity to the bargain concluded between the parties; (3) the normative standard also embraces an obligation to act co-operatively in matters related to performance; (4) the standard does not require a party to subordinate its legitimate interests to those of the counterparty, but is does require due regard to the legitimate interests that both parties have in the performance of the contract they have made; (5) conduct which is dishonest, capricious, arbitrary or motivated by a purpose which is antithetical to the evident object of any provision of the franchise agreement or the Code that governs the conduct being scrutinised or conduct which is otherwise motivated by bad faith will not meet the standard; (6) where the scrutinised conduct, viewed in the particular context, is objectively unreasonable then the unreasonableness may form part of the basis for a conclusion that there has been a lack of good faith, but objective unreasonableness is insufficient of itself to amount to a lack of good faith; and (7) the quality of the scrutinised conduct is to be evaluated having regard to the circumstances of the particular parties, particularly their sophistication, commercial power and the relative significance for each party of the subject matter of the conduct. 747 I note that sometimes the standard is described as incorporating an obligation to act fairly or engage in fair dealing. However when such terms are used they must be understood as being subject to the ability of a party to pursue its own legitimate interests. Further, as I have noted, in s 6(1) of the Code the good faith obligation extends to dealings between the parties before entering into an agreement. The common law use of good faith in such a context appears not to embrace a notion of fair dealing as is indicated by the decision in Strzelecki Holdings. Argument has not been addressed to that aspect. In the view which I take, it is not necessary to consider in this case the extent to which the good faith obligation may import an obligation of fair dealing as to the terms proposed in negotiations. Accordingly, that is an issue that will remain for consideration on another occasion. 748 In the early decision in Renard, Priestley JA referred to the ideas of unconscionability, unfairness and lack of good faith having a great deal in common (at 268). Those terms each express a normative standard of behaviour that is imposed by the law in particular contexts. However, there are important differences. As I have explained above, unconscionability involves a considerable departure from accepted business norms of behaviour such that the conduct is plainly or obviously conduct of a kind that is outside the bounds of those norms. Good faith requires both honesty as well as a genuine commitment to the purposes of the agreement. 749 Clause 6(1) of the Code imposes a standard that is applicable to the manner in which franchisor and franchisee must act toward each other in any action or dealing that is governed by the terms of the franchise agreement or the Code. This follows from the language of cl 6(1) expressing a standard that must be observed by franchisor and franchisee in the way they act towards each other 'in respect of any matter arising under or in relation to' the agreement and the Code. It is not a provision directed towards ensuring that the terms of all franchise agreements meet an objective standard of fairness or reasonableness. Rather, the Code has provisions that are designed to ensure that franchisees have all the information to make an informed decision as to whether to enter into a franchise agreement and, if so, on what terms: as to the disclosure obligations see Ultra Tune at [26]-[57]. 750 So, application of cl 6(1) in any particular case requires the identification of the matter arising under or in relation to the agreement or the Code in respect of which there has been a failure to act in good faith by one party towards the other. It does not enable a general claim to be made that there has been a failure to act in good faith. So, it is to be expected that where a complaint is made as to the conduct of a franchisor 'the focus of an obligation of good faith should ordinarily be on a franchisor's use of powers and opportunities available by reason of the franchise relationship': Ultra Tune at [358].

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Application of principles to the present case 751 As I have noted, the case advanced by the ACCC was to describe a number of aspects of dealings with franchisees that were alleged to be part of a pattern of behaviour and then to make a general claim that conduct of that kind was unconscionable or in breach of the good faith obligation under the Code. There was no attempt by the ACCC to identify in submissions the provisions of the franchise agreements or the Code that applied to the conduct. Rather, the case for the ACCC was advanced on the basis that the same conduct that was unconscionable was also a breach of the good faith obligation in cl 6(1). I have some difficulty with a case formulated in that way given the terms of cl 6(1) which do not impose a general overarching obligation to act in good faith, but rather require the parties to observe the good faith standard when dealing with each other in respect of a matter that arises under or in relation to the agreement or the Code. 752 However, having regard to the nature of the case advanced, I am satisfied that it focussed upon two aspects of the charging practices of Geowash. First, the nature of the statements made in the Disclosure Document (being a document required to be provided to franchisees under the terms of the Code) about the nature of charges to be made by Geowash, particularly those for fit-out and set-up of the franchise site. Second, the way the two staged payments were applied by Geowash having regard to the terms of the franchise agreements entered into with its franchisees. Having regard to the way the case was run, I accept that a claim was made by the ACCC that the manner in which Geowash said it would charge its franchisees in the Disclosure Document and the manner in which it did charge its franchisees (being respectively matters arising under the Code and the agreement) involved a failure to act in good faith. 753 However, much of the evidence relied upon by the ACCC concerned events that occurred prior to 1 January 2015. The ACCC then claimed simply that to the extent that the conduct occurred after 1 January 2015 (when cl 6(1) of the Code took effect) there had been a contravention of that provision. There was no attempt to identify with any precision what occurred after 1 January 2015 in respect of the dealings with any particular franchisee. Clause 6(1) did not provide for the establishment of a breach by demonstrating a general course of dealing. Rather, it was necessary to demonstrate that there had been conduct after 1 January 2015 by Geowash in dealing with particular franchisees that was a failure to act towards that party in good faith. 754 Further, the case advanced by the ACCC was that conduct of the kind described in relation to the unconscionability claim also breached cl 6(1). Accordingly, no case was advanced which segregated that conduct such that part of it, considered separately, amounted to a different kind of conduct that was a breach of the good faith obligation. The character of the conduct alleged to breach cl 6(1) involved each of the aspects of the conduct that was said to be unconscionable. In the circumstances, the ACCC must be confined to the case alleged. 755 Nevertheless, having regard to the nature of the claim made by the ACCC, where Geowash has been shown to charge franchisees after 1 January 2015 then, in the context of the nature of the dealings that I have found to amount to unconscionable conduct, it has been demonstrated that there has been conduct after 1 January 2015 of the kind alleged. That is to say, charging by Geowash after 1 January 2015 cannot be divorced from the earlier dealings concerning the nature of those charges even though they occurred before 1 January 2015. In that context, if there was charging after 1 January 2015 as part of the course of dealing that I have found to have occurred then there has been conduct of the kind alleged by the ACCC to which the Code applies. 756 As a result, it is first necessary to identify the timing of the dealings with each of the franchisees the subject of evidence. 757 As to Mr Singh and Keeran (Domain Car Park), the Disclosure Document was provided in early December 2013, the franchise agreement was signed in late December 2013 and invoices for the staged payments were sent in March and July 2014. The site was set up later in 2014. Thereafter, there was an extended dispute about the site. In those circumstances, I am not satisfied that the case advanced by the ACCC has been demonstrated as to conduct that occurred after 1 January 2015 in respect of Mr Singh and Keeran. 758 As to Mr Chhina and SSS WA Services Pty Ltd (South Fremantle), all dealings occurred before 1 January 2015 and the franchise outlet was opened in August 2014. There has been no conduct to which the Code could apply in relation to dealings with Mr Chhina and SSS WA Services Pty Ltd. 759 As to Mr Brar and B Company for You (Northbridge), the Disclosure Document was provided in June 2014 and the franchise agreement was signed in July 2014. The staged payments were invoiced and paid later in 2014. From 1 January 2015 the dealings between the parties concerned the dispute that arose when finance could not be obtained. Therefore, the case advanced has not been demonstrated by conduct that occurred in respect of Mr Brar and B Company for You prior to 1 January 2015. 760 As to Mr Khalid and Western Care (Palmyra), after dealings about cost, the Disclosure Document was provided on 19 August 2014 and the franchise agreement was signed in September 2014. The first staged payment was invoiced in September 2014 and paid in part in 2014 and the balance of $30,000 plus GST was paid in February 2015. Thereafter, Geowash pressed for payment of further monies according to the staged payment process. On the evidence, those demands were made by reference to the 'previous discussions' that had occurred before 1 January 2015. In doing so, Geowash's conduct in 2015 was engaged in to give effect to the earlier dealings and therefore is to be understood in that context. In those circumstances, I am satisfied that the conduct alleged by the ACCC has been demonstrated to have occurred after 1 January 2015 as to dealings with Mr Khalid and Western Care. 761 As to Mr Kalyan and the Rhods Family Trust (East Perth), the Disclosure Document was provided in August 2014. The franchise agreement was signed in September 2014. The invoices for the staged payments were sent in 2015. The invoices were sent on the basis of the staged payment process and in respect of amounts that had been established in the manner alleged by the ACCC. On that basis it has been demonstrated that Geowash gave effect to charging arrangements of the kind alleged and did so by the manner in which it invoiced the franchisee in 2015. On the findings I have made, those invoices were applied in the manner alleged by the ACCC. On that basis, Geowash engaged in the alleged conduct in its dealings with Mr Kalyan and the trustee of the Rhods Family Trust after 1 January 2015. 762 As to Mr Kumar and Shri Ganpate Namah (Baldivis), there were dealings from November 2013. The franchise agreement was entered into in December 2014. In 2015 demands were made for payment. The demands were made in the context of the earlier dealings. Payments were made in 2015. On that basis, Geowash engaged in the alleged conduct in its dealings with Mr Kumar and Shri Ganpate Namah after 1 January 2015. 763 As to Mr Bhaur and Panjab Pty Ltd (Wanneroo), the Disclosure Document was sent in September 2014. Some payments were made in 2014. The second stage invoice was sent in November 2015 and paid in late 2015 and early 2016. Therefore, Geowash engaged in the alleged conduct in its dealings with Mr Bhaur and Pajab Pty Ltd after 1 January 2015. 764 Therefore, as to four of the franchisees, Geowash charged the franchisee in relation to the fit-out and set-up of the outlet on the basis of the dealings that I have found to amount to unconscionable conduct. For those four franchisees only, for the following reasons I find the conduct of Geowash to have been in breach of cl 6(1) of the Code. 765 For reasons I have given, the amounts were invoiced and received by Geowash on a dishonest basis. They were presented as being invoices for the costs of set-up and fit-out when they were actually invoices for amounts to be used to pay sales commissions and to be applied to meet general fees and expenses of Geowash. They were charges that were not made in accordance with the franchise agreement but were invoiced on the basis that they were due under the franchise agreement. The nature of the bargain made was that Geowash would apply the funds to meet fit-out costs and amounts it was otherwise entitled to charge under the agreement. Notwithstanding the conduct of Geowash in presenting the staged invoices as being for amounts that were needed to set-up the franchise, they were actually to be applied to generate considerable returns for Ms Ali and Mr Cameron. The conduct went beyond a failure to observe the terms of the franchise agreement. As the conduct concerned the charges that Geowash as franchisee could render to franchisees it was conduct in respect of a matter arising under the franchise agreement.

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Part XII: Accessorial liability of Ms Ali and Mr Cameron 766 The principles to be applied in determining whether a party was knowingly concerned in or a party to contravening conduct are well established. The person must have knowledge of the essential matters which constitute the contravening conduct and have been an intentional participant in the essential elements constituting the contravention: Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 at 667. These matters are related because intentional participation is based upon knowledge of the essential elements: Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 at [133]. It is not necessary that the accessory be demonstrated to know that those matters constitute a contravention: Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75; (2003) 216 CLR 53 at [48]. 767 As to the conduct of Geowash concerning the manner in which franchisees would be charged for establishing their franchise, on the findings I have made, Ms Ali and Mr Cameron were the architects of the business practices that were followed in the dealings with prospective franchisees, they were the principal actors, they knew all the relevant facts and they were the principal financial beneficiaries of the conduct. They both knew how the funds were being applied, particularly that they were being used to make the commission payments and to meet general costs and expenses of Geowash. Therefore, they have been shown to be knowingly concerned in and parties to the misleading conduct, the unconscionable conduct and the breach of cl 6(1) of the Code by Geowash that I have found. 768 Ms Ali and Mr Cameron sought to place reliance on their knowledge of the legal advice from Madgwicks. I have found that there was no relevant legal advice given concerning the conduct. Therefore, it is not necessary to consider the circumstances in which the receipt of legal advice to the effect that the conduct does not contravene the law might be relevant to determining whether a party is an accessory. 769 It was submitted that if the conduct of Geowash was unconscionable or in breach of the good faith obligation then Ms Ali and Mr Cameron each lacked knowledge of an essential element of the claim that Geowash engaged in unconscionable conduct because they had a positive belief that they were not acting contrary to the franchise agreements and that they charged according to the two staged approach which is what they told franchisees would occur. The first part of the submission amounts to a claim that Ms Ali and Mr Cameron did not know they were breaching the law. Rather, the question is whether they knew the essential elements of the contravening conduct. They did. The second part of the submission fails to place the relevant conduct in the overall context. It was not merely the two staged invoice process that meant there was a contravention. 770 As to the revenue and profit representations, Ms Ali knew the nature of the information and she was personally responsible for the form in which the website information was presented. The addition of the information was made at her request and on her authority. The information was added to the website at the specific request of Ms Ali. It was the only information on the website of that character. It was considered important enough that Ms Ali made arrangements to add it. The information is presented as an annual average. Any cursory examination would have revealed that the most recent figures of one franchisee were being presented as an average annual level of earnings. In those circumstances I find her evidence that she did not pay particular attention to the manner of use of the word average to be implausible and I do not accept it. I find that Ms Ali read the information on the website at or about the time it was first published. 771 Ms Ali said that Mr Verebes advised her that she could put financial information on the website as long as they were actuals. I do not accept that Ms Ali had advice from Mr Verebes about financial information on the website. But even assuming, contrary to that finding, that evidence of the kind stated was provided, it was not advice that suggested it was appropriate to present actual monthly information of the kind that was presented in the manner in which it was presented. Ms Ali was knowingly concerned in and a party to the contravening conduct in respect of the income and revenue representations. 772 Mr Cameron was not involved in the publication of the financial information about average earnings and profit. His evidence, which I accept, was that Ms Ali made the update to the website and then asked him to look at it. He was told that it was the actuals from Osborne Park. He did not go through the information in detail. 773 As to the affiliation representation, Ms Ali accepted when questioned that the inclusion of the logos conveyed a representation that Geowash had a commercial relationship or affiliation with the companies associated with those logos. She also accepted that was not the case and she knew that not to be the case at the time. I find that she was knowingly concerned in and a party to the contravening conduct of Geowash in publishing the logos on the website. 774 Mr Cameron spoke to Ms Ali about the inclusion of the logos at the time that they were added to the Geowash website. He knew they had come from the website for Geowash International. He said that Ms Ali told him that the brands could be used because of the international connection. 775 At the time, Mr Cameron knew that Geowash did not have any relationship with all the international brands included on the Geowash website. He knew that the inclusion on the website was representing that there was an affiliation with Geowash and that was why he asked the question of Ms Ali. Objectively viewed by any reasonable person in the position of Mr Cameron, the fact that there was an international affiliation was not a sufficient basis to support the manner in which the logos were included on the website. 776 In the course of evidence he tried to explain that the reference to the brands might be justified because a particular franchisee might have a local association with one of the brands. I do not accept that a consideration of that kind was discussed between Ms Ali and Mr Cameron at the time. Nor would a consideration of that kind provide any reasonable basis for the manner in which the logo information was presented on the website. 777 Nevertheless, on the evidence, I find that it has not been demonstrated that Mr Cameron was responsible for the addition of material to the website or its presentation to the public. That was a matter for Ms Ali. There is no suggestion that Mr Cameron instigated the inclusion of the financial information or the logos or that he was influential in their publication. There is no suggestion that he referred to the information in any of his dealings with franchisees. Therefore, I find that he was not an accessory to the revenue, profit or affiliation representations. 778 On the findings I have made, I reject the submission that Ms Ali and Mr Cameron have demonstrated that the requirements for the exercise of the power conferred by s 226 of the ACL have been established.